International special situation funds buy $1 billion worth of Adani bonds: Report

By Consultants Review Team Tuesday, 07 February 2023


As inAs in days following the publication of the Hindenburg report on January 24, a number of global special situation funds, including large and distressed-debt specialists, bought sizable amounts of foreign currency bonds from Adani Group companies.

The bonds owned by these funds now total around $1 billion, sources, as per a renowned media house.

US hedge funds Baupost Group and Silver Point Capital, with varied maturities, are among the firms that have invested, and the majority of the purchasing has taken place in Special Economic Zones.

Additionally, they consist of the special circumstance funds run by Oaktree Capital, SSG Capital, Broad Peak Capital, and Varde Partners.

The majority of transactions have already taken place, and the supply has significantly decreased, revealed one of the sources while mentioning that big bond houses have been the main sellers as they pulled out when the yield jumped. Since such bonds frequently have weak liquidity in the regular course of business, these transactions are essentially pre-negotiated, but investors with higher risk tolerance can plainly sense a trade.

As collateral for margin loans, Standard Chartered no longer accepts bonds issued by Adani Group companies. According to the report, the lender has urged its private clients to supplement their collateral if necessary.

The decision was made in response to similar actions taken by Credit Suisse Group AG and Citigroup's wealth unit after allegations of fraud from US-based Hindenburg Research rocked the Adani securities. The Adani group has always refuted the accusations made by the short seller.

On February 1, The private bank of Credit Suisse stopped making margin loans on Adani bonds. For the notes sold by Adani Electricity Mumbai, Adani Green Energy, and Adani Ports and Special Economic Zone, the private banking division of the Swiss lender awarded a zero lending value.

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