Indian conglomerate, Adani Group, is reportedly planning to secure at least $10 billion in new debt through the coming year as the group looks to refinance high-cost borrowings and funding future projects, claim sources privy to the matter.
With multiple instruments, such as green bonds and foreign currency debt, the Gautam Adani-founded group is looking to raise around $6 billion to replace its high-interest debt with lower-cost borrowings while the rest will be used for financing projects.
Sources added that this effort can begin within the ongoing quarter.
This move is targeted at reducing the group’s overall repayment burden, which gained attention after the billionaire sought a series of ambitious acquisitions for expanding into various sectors such as media, digital services, and green energy.
Despite rising global interest rates, the group is confident in securing lower-cost loans given its larger asset base, according to sources. But they added that the timing of the effort may change depending on global market conditions.
Adani Group is yet to make a public comment on the matter.
The sources also noted that the fundraising is separate from its plan to look into strategic equity investments.
Recently, the billionaire snapped up the Indian units of Holcim in a $6.5 billion deal, making the company the second-largest cement producer in India, raising concerns about the conglomerate’s increased leverage ratios.
Although it has been defending its debt levels, calling them healthy, the efforts in reducing borrowing costs indicate the group’s need to avoid becoming over-extended, or at least not perceived as such.
With surged dollar-denominated financing costs in the last two months, the relative cost of swapping old debt for new is at an all-time high since the global financial crisis of 2008.
Moreover, the yields on Adani bonds rose this year amid increasing dollar borrowing costs, now well above the level at the time of issuing, suggesting that firms might need to pay a premium now for borrowing.
In all, raising lower-cost debt at this time will serve as a test of the group’s mettle and its goodwill with bond lenders and investors.