Adani Bond’s plunge deepens as rebuttal fails to allay concerns

(Bloomberg) – The slide in dollar bonds of Adani Group companies intensified on Monday after a rebuttal from the Indian conglomerate failed to allay concerns following a scathing report last week by the seller at discovered Hindenburg Research.

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The 2027 note of Adani Ports & Special Economic Zone Ltd. fell 6.2 cents on the dollar in Hong Kong at 1:49 p.m., paring a larger decline earlier when it hit a new low, according to data compiled by Bloomberg. At least four group ratings, including Adani Electricity Mumbai Ltd.’s debt, fell to distress levels below 70 cents on the dollar, generally indicating growing concern over solvency.

The Adani Group released a 413-page rebuttal of Hindenburg’s fraud allegations on Sunday as its flagship company seeks to complete a stock sale. Hindenburg Research said in response that the rebuttal did not specifically answer most of the questions it posed, and the group “largely confirmed or attempted to circumvent our findings.”

Shares in billionaire Gautam Adani’s corporate empire were also sold on Monday, with the rout stretching to $66 billion.

“US investors were selling on Friday and that fueled today’s price action” for bonds, said Kaveh Namazie, credit strategist at Australia & New Zealand Banking Group Ltd. “Investors are also likely waiting for more clarity on the follow-up to Adani Enterprises-public offering and if there are any delays or pricing adjustments for the institutional portion that was completed last week.

At least eight other Adani corporate bonds fell more than two cents on the dollar on Monday in volatile trading, as the value of the company’s debt plunged hundreds of millions of dollars in less than a week.

Hindenburg said last week that he took a short position in Adani’s companies through US-traded bonds and non-India-traded derivatives.

In Adani’s rebuttal released on Sunday, the group said some 65 of the 88 issues had been addressed in its public disclosures, describing the short seller’s conduct as “nothing less than securities fraud calculated under applicable law”. The conglomerate reiterated that it “will exercise our rights of recourse to protect our stakeholders before all competent authorities.”

The lengthy response comes in the final leg of a stock offering by Adani Enterprises, which received 1% aggregate subscriptions for the institutional and retail portion on Friday.

While investors in Indian public offerings typically wait until the last day of the sale to place bids, there were fears that Hindenburg’s attack on the country’s richest man could sour sentiment. The sale to anchor investors, which includes the Abu Dhabi Investment Authority, was priced at the high end of the range.

(Updates with details on bond and stock prices.)

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