Adani bonds draw strong demandAdani Airport Holdings last week printed its largest bond in the domestic market since Hindenburg Research's explosive report on its parent last year, while Adani Road Transport is considering a rupee bond to fund a road project and investor meetings have started for a US dollar secured bond backed by four solar and wind plants. Adani Airport on Monday sold Rs19.5bn (US$233m) of three-year, 11-month and seven-day bonds at 9.35%, payable monthly. The annual coupon is around 9.75%. Mutual funds and financial intermediaries, which were anchor investors, were the main buyers, according to sources. Adani Road Transport is working on a rupee bond of Rs15bn–Rs17bn to fund a project under a hybrid annuity model with the National Highways Authority of India, with the deal expected by the end of October. The bonds will be sold in one or two tranches with tenors of 13–15 years and a call option or spread reset after three to five years, according to sources. A hybrid annuity model is a kind of public-private partnership in which the government makes some payments according to construction milestones and then pays annuities during operations. An Adani Group spokesperson did not reply to an email seeking confirmation of the road unit's plan. The airport unit's bonds attracted "robust participation from a diverse group of investors, with a significant portion being absorbed by mutual funds", Nitin Chaturvedi, head of treasury at Adani Group, said in a LinkedIn post. This is the first time domestic mutual funds have subscribed to a bond from an Adani Group entity since US short-seller Hindenburg's report on the group in January 2023. The report led to a collapse in the share prices of seven listed group companies and forced Adani Enterprises to withdraw a Rs200bn follow-on offer last year and scrap plans for a public bond sale. The Gautam Adani-controlled group has denied the allegations of stock manipulation and false accounting. "Domestic mutual funds were sceptical about investing in the bonds of Adani Group units last year, but now the perception has changed," said a DCM banker. A second banker said: "There is no specific apprehension on Adani Group any more and mutual funds are ready to pick up a sizeable chunk of the deal." Mutual fund investors are keen on taking exposure to Adani Group bonds after Adani Energy Solutions raised Rs83.7bn through a qualified institutional placement of shares in August and its maiden public bond issue of Rs8bn in September was oversubscribed. SBI Equity Hybrid Fund, Aditya Birla Sun Life Mutual Fund and Aditya Birla Finance were anchor investors in the Adani Airport bonds for Rs2.85bn, Rs500m and Rs1bn, respectively. Following the bidding, Rs9.5bn was allocated to SBI Equity Hybrid Fund, Rs1.25bn to Aditya Birla Sun Life Mutual Fund, Rs3bn to financial intermediaries of Aditya Birla Group, Rs5bn to Axis Bank and Rs750m to a wealth advisory firm, according to a source. Earlier this year, Adani Group conducted non-deal roadshows and invited mutual fund investors to tour its assets in India, sources said. Adani Enterprises, the group's flagship company, plans to launch a US$1.5bn–$2bn qualified institutional placement as early as this week, subject to investor demand. Cashflow-backed structure Few details were immediately available on the US dollar bond deal beyond a red herring document released on Friday that lists DBS, Emirates NBD, First Abu Dhabi Bank, ING, IMI-Intesa Sanpaolo, Mizuho, MUFG, SMBC Nikko, Societe Generale and State Bank of India as bookrunners. The deal from Adani Road Transport, meanwhile, is expected to be popular with investors who like the hybrid annuity model as it has a cashflow-backed structure with good visibility of revenue, fund managers said. "If the bonds are NHAI-backed and the credit quality is good, there will be interest from mutual funds," one fund manager said. The second banker said: "There will be investor appetite for bonds which are backed by ass
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