Adani Abbot Point Terminal Pty, the Indian-owned coal-port operator seeking to expand facilities in northern Queensland, plans to raise funds via a debut five-year bond in Australia.
The company is marketing the senior secured Australian-dollar notes at a spread of about 225 basis points more than the swap rate, according to an e-mailed statement today from Commonwealth Bank of Australia, which is managing the transaction with Deutsche Bank AG and Westpac Banking Corp.
The port leaseholder, part of India’s Adani Group, is looking to take advantage of demand from Australian investors for higher-yielding corporate credits. The benchmark-sized transaction is expected to carry the lowest investment-grade rating at both Standard & Poor’s and Moody’s Investors Service.
Adani entered into an agreement in 2011 with the Queensland government to lease the existing terminal at Abbot Point, the country’s most northerly deep-water coal port, for 99 years, according to the company’s website. It’s seeking approval to develop additional facilities to boost capacity and also wants to build new facilities at Hay Point in northern Queensland, home to two other export terminals.
Similarly-rated Lend Lease Group, Australia’s largest listed property developer, sold A$250 million ($241 million) of 5 1/2 year notes in May at a spread of 235 basis points. The notes are currently yielding about 165 basis points more than swaps, Australia & New Zealand Banking Group Ltd. prices show.
Downer EDI Ltd., a mining contractor which carries Fitch Rating Ltd.’s second-lowest investment grade, paid 260 basis points more than swaps to sell 5 1/2-year bonds in May. The spread on those securities is now 236 basis points.
The average spread over swap rates on an index of corporate Australian bonds was 105 basis points yesterday, Bank of America Merrill Lynch indexes show. Corporate spreads, which blew out from a 2013 low of 103 basis points on March 28 to 129 basis points on July 2 amid prospects for reduced Federal Reserve stimulus, have tightened as the timing of tapering shifted.
Adani Abbot Point’s bond transaction is expected to price today or tomorrow, according to CBA.