As the dust seems to have settled around Adani Group bonds after the recent US-related developments, global brokerage JP Morgan has said that Adani bond portfolio's liquidity is stable, giving an Overweight (OW) rating on four bonds of the Adani Group firms.
In a note, JP Morgan gave OW rating on three bonds of Adani Ports and Special Economic Zone (APSEZ) and one of Adani Electricity Mumbai Ltd (AEML), a subsidiary of Adani Energy Solutions.
Adani Group bonds have settled after a period of volatility, widening by about 100–200 basis points, it said.
The Group companies liquidity appears stable after accounting for near-term maturities for offshore debt, said JP Morgan while adding focus on Adani Green Energy (NS:ADNA) Ltd's bond issue.
"The ability to scale and grow using internal cash flows in the case of Adani Ports gives us strong comfort on the intrinsic equity value of such a business, which in turn reduces the scope for credit stress," the note by the global brokerage read.
JPMorgan (NYSE:JPM) said the ports-to-power conglomerate's short-tenor bonds saw more spread widening due to higher dollar prices.
On average, the group's bond yields have widened by - Adani Ports and Special Economic Zone: 140 basis points, Adani Transmission (NS:ADAI): 180 basis points, Adani Electricity Mumbai: 140 basis points, and Adani Green RG bonds: 150 to 160 basis points.
Post these moves, the brokerage house prefers some short-end bonds and 'ADTIN 2026s' (Adani Transmission) in particular, on which they moved to an 'overweight' rating.
Within the 'overweight' ADSEZ (Adani Ports & SEZ) curve, JPMorgan prefers 'ADSEZ 32s' over 'ADSEZ 41s', thus initiating coverage with 'overweight' on the former and upgrading the latter to 'overweight'.
Having tabulated near-term maturities for offshore debt at various group companies, JPMorgan took "varying degrees of comfort".
"Overall, we take varying degrees of comfort, and believe that key to watch among the bond-issuing entities is mainly Adani Green, which has a decent-size loan ($1.1 billion) due in March 2025," said the global financial services major.
Operational risks in Adani Group have declined over the years with a fall in share pledges and improving leverage, among others, as said by Bernstein Research in its recent note.
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