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Bond Market Insights - Fri, 27 Jan 2023

The report on the Adani Group by activist short seller Hindenburg caused the curve to sell off 12-13pts in IG names, and 15-16pts in HY. Adani Green Energy, ADANIG 4 ⅜ 09/08/24 (Ba3) closed 5pts off the lows, so about 10pts lower from pre-news. The Adani Ports and Special Economic Zone (ADSEZ BBB-, Baa3) was more muted, with higher priced bonds being hit harder initially. ADSEZ 3 ⅜ 07/24/24 has recovered from 85.50/87 to trading at 92.50 this morning. Real money has been on both sides of the market, while private banks have dominated the buy side.


Adani Transmission (ADTIN) and Adani Electricity (ADANEM) sellers seem to be holding off, although the bonds have been marked down.


The allegations are not new. The Adani’s have previously been investigated by the regulator and the group was cleared, but perhaps in the same way that Madoff was cleared by the SEC (yes, I just watched the Netflix mini-series). But the publication comes after a decent run up in prices over the last few months. The street view is that the bonds display value here compared to similarly rated peers.


The Adani action has had little effect on other India IG or HY credits, both were unchanged and high yield saw better real money buyers.


Investment-grade bonds in Asia ex-Japan have returned 2.51% so far in January, on course for their second-best monthly performance since 2011. In Nov. 2022 Asia-Ex IG managed 5% return according to data from Bloomberg.


Australia is opening stronger after the holiday, Aussie Bank Tier 2 debt is 5-10bps tighter this morning.


The US investment grade primary market saw Regional banks continue to capitalize on the dearth of issuance from the six biggest US banks. US Bancorp, Norfolk Southern and Kinder Morgan priced the new issues tighter than their existing debt. US Bancorp got more than $15bn in peak (peak being at the initial price level, before tightening to the reoffer price) orders topping the $14bn book that Truist built on Monday.

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