JP Morgan says Adani group eligible for its key indexes

In a relief to the Adani group shares going through a selloff in the past two weeks, US-based multinational investment bank JP Morgan in its latest note has said the group companies are eligible for inclusion in its influential bond indexes.

According to the note, the group has a notional value of $7.7 billion in JPMorgan's CEMBI and JACI indexes.

The J.P. Morgan's CEMBI Broad Diversified Core Index (CEMBI CORE) tracks the performance of US dollar-denominated bonds issued by emerging market corporate entities, while the J.P. Morgan Asia Credit Index Core (JACI Core) provides investors with a benchmark that tracks US Dollar-denominated debt instruments issued in the Asia ex-Japan region.

Adani's dollar bonds are also eligible to be part of JPMorgan's ESG Global Corporate Index (JESG), an integrated environmental, social, and governance corporate benchmark covering Investment Grade and High Yield markets across USD, EUR, and GBP currencies.

The latest note by JP Morgan comes four days after another US-based ratings agency Fitch Ratings said last week that there's no immediate impact on the credit ratings of the Adani group entities and their securities after an adverse report by a US-based short-seller Hindenburg Research against Gautam Adani-controlled firms. The global rating agency does not expect any material changes to its forecasted cash flow, adds Fitch.

“There are also no near-term significant offshore bond maturities -- earliest in June 2024 for Adani Ports and Special Economic Zone Limited (APSEZ, BBB-/Stable); December 2024 for Adani Green Energy Limited Restricted Group 1 (AGEL RG1, BB+/Stable); and 2026 or beyond for all other entities – reducing refinancing risks and near-term liquidity risks,” Fitch said.

However, to allay the investor fears and regain confidence, the Gautam Adani-led ports-to-energy conglomerate on Monday said in light of recent market volatility and to cut the overall promoter leverage backed by Adani Listed Company shares, its promoters plan to prepay $1,114 million ahead of its maturity of September 2024.

With the pre-payment of share pledges, 168.27 million shares of Adani Ports & Special Economic Zone, representing 12% of the promoters’ holding will be released in due course, the company said.

According to the company, following the move, around 27.56 million shares of Adani Green Energy, representing 3% of promoters’ holdings, are expected to be released. About 11.77 million shares of Adani Transmission, representing 1.4% of promoters’ holdings, will also be released.

Notably, Hindenburg on February 24 revealed a short position in Adani group companies through its U.S.-traded bonds and Indian-listed derivatives, citing the seven listed entities of the conglomerate are 85% overvalued.

In light of positive developments, the shares of most Adani group companies were trading higher on Tuesday. All Adani group stocks were trading in the green on Tuesday, barring Adani Power and Adani Total Gas, in an otherwise volatile broader market.