SBI Mutual Fund Eyes to Purchase 10% of Adani Power’s Rupee Bond Offering

State Bank of India’s mutual fund arm has committed to purchase at least 10% of Adani Power’s upcoming rupee bond issue, as per Reuters. The mutual fund plans to invest ₹7.5 billion as an anchor investor in the transaction, as per recent reports. 

The proposed ₹7.5 billion bond sale, or about $820 million, is expected to be the Adani Group’s largest rupee bond issuance to date.  

Structure of the Issuance 

Adani Power plans to raise ₹28.6 billion through 2-year bonds and ₹26.9 billion via 3-year notes. SBI Mutual Fund is expected to buy ₹4.5 billion of the 2-year tranche and ₹3 billion of the 3-year tranche. 

The remaining amount will be raised through longer tenures, with ₹6.75 billion via 4-year bonds and ₹12.75 billion through 5-year bonds. 

Coupon Rates and Rating Terms 

The 2- and 3-year bonds are expected to carry coupons of 8.00% and 8.20%, respectively. The 4- and 5-year papers will offer coupons of 8.30% and 8.40%. 

The bonds include a step-up clause under which the coupon will rise by 25 basis points for each notch downgrade in the credit rating. The issue is rated ‘AA’ by Crisil and India Ratings. 

Arrangers and Lender Backing 

Trust Investment Advisors, ICICI Bank and Axis Bank are arranging the bond sale. ICICI Bank and Axis Bank have also provided commitments of ₹3.31 billion and ₹3 billion, respectively, as per Reuters. 

Earlier this financial year, Adani Ports and Special Economic Zone (APSEZ) raised ₹50 billion through 15-year bonds placed directly with Life Insurance Corporation of India (LIC). 

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Conclusion 

The Adani Power bond issue, with anchor participation from SBI Mutual Fund and multiple maturities, is set to be the group’s largest rupee bond sale and follows recent domestic bond placements by other Adani entities. 

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