Adani Bond Plunge deepens as rebuttal fails to allay concerns

(Bloomberg) — A plunge in dollar bonds from Adani Group companies intensified Monday after a rebuttal by the Indian conglomerate failed to allay concerns following a damning report last week by short seller Hindenburg Research.

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The 2027 note of Adani Ports & Special Economic Zone Ltd. Hong Kong fell 6.2 cents against the dollar as of 1:49 p.m., offsetting a larger decline earlier when it hit a new low, data compiled by Bloomberg shows. At least four group notes, including debt from Adani Electricity Mumbai Ltd., have fallen to a distressed level of less than 70 cents on the dollar, generally pointing to growing credit concerns.

The Adani group published a 413-page rebuttal to allegations of fraud by Hindenburg on Sunday as the flagship company attempts to complete a share sale. Hindenburg Research said in response that the rebuttal did not specifically answer most of the questions raised, and the group “largely confirmed or attempted to evade our findings.”

Shares of billionaire Gautam Adani’s business empire also sold off Monday, with the loss extending to $66 billion.

Kaveh Namazie, credit strategist at Australia & New Zealand Banking Group Ltd. “U.S. investors were selling on Friday and that led to today’s price action” for bonds. “Investors are also likely awaiting more clarity on the follow-up to Adani Enterprises public offering and whether there are any delays or price adjustments in the institutional leg that was completed last week.

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

Hindenburg said last week it had taken a short position in Adani’s companies through US-traded bonds and non-Indian derivatives.

In Adani’s rebuttal published Sunday, the group said about 65 of the 88 questions have been addressed in the public disclosures, describing the short seller’s behavior as “nothing less than a calculated securities fraud under applicable law.” The conglomerate reiterated that it “will exercise our rights to seek remedies to protect our stakeholders before all competent authorities.”

The lengthy response comes in the latest installment of an equity offer by Adani Enterprises, which received a 1% total bid 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 concerns that Hindenburg’s attack on the country’s richest man would sour sentiment. Sales to anchor investors, including Abu Dhabi Investment Authority, were priced at the high end of the band.

(Updates detailing bond and stock prices.)

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