Adani Group’s offshore bonds dropped in value after the Modi government failed to secure the expected election majority. Adani Green’s $409 million bond fell from 95/96 to 93/94, and Adani SEZ’s $750 million bond due in 2029 fell from 90 to 88/89. This political shift led to a 20% drop in Adani Group stock prices due to the BJP’s poorer than expected performance.
Borrowing costs for Adani companies are likely to rise as investors add a risk premium due to the weaker government. While Adani bonds fell by 25 basis points, investment-grade bonds only fell by 3 to 4 basis points.
Bond traders expect further declines in Adani bonds. “No one is betting on Adani just yet,” said a bond trader. “Adani bonds will underperform the overall dollar bond market.”
Over the past few months, Indian dollar bonds had outperformed global bonds due to a stable outlook for India. However, the recent political uncertainty is expected to cause Indian bonds to underperform.
Adani Group stocks, including Adani Enterprises and Adani Ports, were among the biggest losers in the Nifty 50, with Adani Green Energy and Adani Wilmar hitting the lower circuit due to political developments affecting investor confidence.
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