JP Morgan Gives Overweight Rating To Adani Group Bonds; Sees Stable Liquidity

After recent US-related developments, the dust seems to have settled around Adani Group’s bonds, with global brokerage JP Morgan reporting stable liquidity in the group’s bond portfolio.

The brokerage has given an Overweight (OW) rating on four Adani Group bonds, including three from Adani Ports and Special Economic Zone (APSEZ) and one from Adani Electricity Mumbai Ltd (AEML), a subsidiary of Adani Energy Solutions.

JP Morgan highlighted that Adani Group bonds have stabilized following a period of volatility, with spreads widening by approximately 100–200 basis points.

The liquidity situation is expected to remain stable, especially considering the near-term maturities of the group’s offshore debt.

JP Morgan also pointed out that Adani Green Energy Ltd’s upcoming bond issue will be a key focus for investors.

The note by the global brokerage stated, “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.”

Adani Group’s Short-Tenor Bonds Face Wider Spreads Amid Dollar Price Surge

Despite some volatility, the brokerage noted that Adani Group’s short-tenor bonds experienced more spread widening due to higher dollar prices.

Average bond yields have widened by: 140 basis points for Adani Ports and Special Economic Zone, 180 basis points for Adani Transmission, 140 basis points for Adani Electricity Mumbai, and 150-160 basis points for Adani Green RG bonds.

After evaluating these movements, JP Morgan expressed a preference for certain short-end bonds, particularly the ‘ADTIN 2026s’ (Adani Transmission), which it has rated as Overweight.

Within the APSEZ curve, JP Morgan recommended ‘ADSEZ 32s’ over ‘ADSEZ 41s’, initiating coverage with an Overweight rating on the former and upgrading the latter to Overweight.

JP Morgan assessed near-term offshore debt maturities across group companies and expressed mixed levels of confidence.

The global financial services major asserted, “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.”

Operational risks for the Adani Group have reportedly decreased over time, with reduced share pledges and improving leverage, according to Bernstein Research.

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