Goldman Sachs, JPMorgan Say Adani Debt Offers Value To Trading Clients

Goldman Sachs Group Inc. and JPMorgan Chase & Co. have told some clients that bonds related to Gautam Adani's business empire can offer value due to the strength of certain assets.

On a call with investors Thursday, Goldman Sachs trading executives expressed the firm's view that Adani debt had hit a floor in the short term and bonds of Adani Ports & Special Economic Zone Ltd. have become interesting at the current price due to the value of that company's assets, people with knowledge of the matter said. Before Adani pulled a stock sale, JPMorgan credit analysts said in a note to clients that they saw value in debt of some Adani operating companies.

Adani securities have attracted attention from opportunistic investors amid a staggering equity rout and a debt slump that took some bonds to distressed levels. That's led to interest from clients of the biggest Wall Street banks to understand the extent of crisis surrounding the Indian billionaire, who was targeted by short-seller Hindenburg Research before scrapping an equity sale for his flagship Adani Enterprises Ltd.

The Goldman Sachs traders touted Adani Ports's debt as being well capitalized with cash on hand, while being liquid enough to trade. They also expected this entity to be able to refinance its bonds while having the prospect of attracting equity investors and selling assets, according to the people, who asked not to be named discussing private comments.

A Goldman Sachs spokesman declined to comment on the client call.

Goldman said it had traded about $170 million of Adani bonds on Thursday before the call, attracting interest from global funds and distressed investors outside of Asia looking to scoop up the debt from an early stage, the people said.

Bonds of firms related to Adani plunged to distressed levels after the firm canceled a planned $2.4 billion offering Wednesday, even though it had secured money from the Middle East and India.

Goldman traders told investors that it was likely the bond prices had hit a floor, with no evidence of forced selling or contagion, according to the people.

Bonds of Adani Ports jumped more than 4 cents on the dollar on Friday, according to prices compiled by Bloomberg.

Meanwhile, analysts at JPMorgan said the journey for Adani isn't straightforward, yet the bank still preferred to keep exposure to the group, through bonds of well-regulated assets with marquee external shareholders.

Within the sprawling Adani Group of companies, JPMorgan puts the bonds of Adani Electricity and operating companies of Adani Green Energy Ltd. high up in its pecking order.

"We think eventual asset value as well as comfort on corporate governance would be greatest on regulated ring-fenced assets," the analysts wrote in a note last week.

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