Adani Bond’s plunge quickens as rebuttal fails to allay concerns
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The 2027 note of Adani Ports & Special Economic Zone Ltd. fell 7.1 cents on the dollar to 72 cents in Hong Kong, hitting a new low after falling 11 cents last week, according to data compiled by Bloomberg. The sale of billionaire Gautam Adani’s corporate empire had already erased more than $50 billion in market value as Asia’s richest man struggles to contain the fallout.
At least eight other Adani corporate bonds fell more than two cents on the dollar on Monday in volatile trading, as the value of the company’s debt plunged hundreds of millions of dollars in less than a week.
The Adani Group released a 413-page rebuttal of Hindenburg’s fraud allegations on Sunday as its flagship company seeks to complete a stock sale. Hindenburg Research said in response that the rebuttal did not specifically answer most of the questions it posed, and the group “largely confirmed or attempted to circumvent our findings”.
“US investors were selling on Friday and that fueled today’s price action,” said Kaveh Namazie, credit strategist at Australia & New Zealand Banking Group Ltd. “Investors are also likely waiting for more clarity on the Adani Enterprises follow-up public offering and if there are any delays or pricing adjustments for the institutional portion that was completed last week.
Shorting Bonds
Hindenburg said last week that he took a short position in Adani’s companies through US-traded bonds and non-India-traded derivatives.
In Adani’s rebuttal released on Sunday, the group said some 65 of the 88 issues had been addressed in its public disclosures, describing the short seller’s conduct as “nothing less than securities fraud calculated under applicable law”. The conglomerate reiterated that it “will exercise our rights of recourse to protect our stakeholders before all competent authorities”.
The lengthy response comes in the final leg of a stock offering by Adani Enterprises, which received 1% aggregate subscriptions for the institutional and retail portion on Friday.
While investors in Indian public offerings typically wait until the last day of the sale to place bids, there were fears that Hindenburg’s attack on the country’s richest man could sour sentiment. The sale to anchor investors, which includes the Abu Dhabi Investment Authority, was priced at the high end of the range.
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