Adani Group's bonds fall in direct contrast to share movement. All you want to know

Billionaire Gautam Adani may be the second-richest man on the planet but that has not stopped his conglomerate’s debt instruments from facing a rout. 

A report by news agency Bloomberg has said that while Adani Group’s shares have surged on the stock market, some of the group companies' bonds have dropped this year on concern about the group’s debt.

For instance, Adani Ports’ dollar bonds have dropped more than Indian peers, and its notes due in August 2027 fell to an all-time low this week, the report said.

How have bonds of other group companies done?

According to Bloomberg, bonds of group companies including Adani Green Energy Ltd and Adani Transmission Step-One Ltd mostly underperformed the broader Indian market.

How have the Adani stocks actually performed in the recent past?

Stocks of companies in Adani's business empire have jumped, due partly to soaring energy prices. Adani Ports & Special Economic Zone Ltd has climbed 29% in 2022 and hit a record this week. Shares of some other companies have surged more than 1,000% in the past two years, Bloomberg said.

What do these diverging moves suggest?

According to Bloomberg, these diverging moves suggest that high debt poses risks to Adani’s success story that saw his net worth shoot up to only trail Tesla and SpaceX founder Elon Musk’s. 

How have Adani Group’s dollar bonds actually done in the recent past?

Bloomberg said that Adani Ports’ seven dollar-denominated notes have lost about 14% on average so far this year, while Adani Transmission Step-One’s notes due in 2036 and Adani Electricity Mumbai’s 2030 securities have lost more than 17% each. That exceeds a 10% decline for Indian dollar debt overall and a 13% drop in US currency notes in Asia excluding Japan, as rising borrowing costs in the US drag down the region’s dollar-denominated debt.

But have all Adani bonds underperformed?

Not all Adani bonds have underperformed the broader market, even though they’ve lost money. Adani Green Energy’s 2024 notes lost 9% and Adani Ports’ securities due in the same year dropped 4.4%, Bloomberg said.

Apart from Bloomberg, which other agencies have highlighted the Adani Group’s burgeoning debt?

Fitch Group unit CreditSights had raised concerns about Adani Group’s debt in a recent report. It said that the conglomerate’s rapid expansion into areas such as renewable energy and media has left it with leverage that it said was an described as elevated and “a matter of concern.". 

How much debt is on the books of the Adani Ports?

Adani Ports’ total debt stood at Rs 45,640 crore at the end of March, according to the group. That would be the highest in at least 10 years, data compiled by Bloomberg show.