Another source, a U.S. based hedge fund manager, said he was looking to short Adani's dollar bonds after the Hindenburg report but was finding it difficult to borrow bonds to sell. Bid-offer spreads, a measure of liquidity, widened significantly after the Hindenburg report, Tradeweb data showed. Widening spreads mean the difference between the price sellers are asking and buyers are willing to pay is increasing, making it harder and more costly for investors to trade in and out of positions. For the $500 million Adani Ports and Special Economic Zone bonds due in 2027 , for example, that spread doubled since the report came out when compared to its average since the beginning of the year, according to Tradeweb data and Reuters calculations. Most of some $8 billion of Adani firms' outstanding bonds fell below the 70 cents on the dollar mark - which is seen as distressed territory – after the Hindenburg report. But even as S&P Global cut its outlook on Adani Ports and Special Economic Zone and Adani Electricity to negative from stable last week, citing governance risks and funding challenges for the Indian conglomerate, the bond prices recovered to move out of distressed territory. In a new blow to Adani, Moody's downgraded on Friday the ratings outlook for some Adani Group companies, while MSCI said it would cut the weightings of some in its stock indexes. Since Hindenburg's report, the Indian conglomerate, which has denied any wrongdoing, has seen more than $100 billion wiped off the value of its seven listed firms. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Bid-offer spreads on Adani bonds widen ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Davide Barbuscia and Carolina Mandl; Editing by Shankar Ramakrishnan, Mark Potter and Anna Driver)
(Adds Tradeweb data, graphic)
By Davide Barbuscia and Carolina Mandl
Feb 10 (Reuters) - Some investors planning to take
advantage of recent price swings in dollar bonds issued by
India's troubled Adani Group are struggling to find
counterparties, which is preventing them from buying more paper
or betting on further drops in value.
Dollar bonds issued by Adani Group entities fell sharply
after short-seller Hindenburg Research published a report on
Jan. 24 accusing the conglomerate of improper use of offshore
tax havens and stock manipulation. It also said it had taken
short positions in those bonds.
But the debt securities have pared losses in recent days.
Adani Green Energy bonds due in 2024 , for
instance, were up at about 75 cents on the dollar on Friday
after hitting a record low of about 62 cents last week,
according to Tradeweb data. Those same bonds were trading at
about 95 cents before the short-seller report.
One U.S. holder of Adani bonds looked to buy more this week
but said his trade orders were not being executed because of
lack of available paper.
Another U.S. based emerging markets focused money manager
who held Adani bonds said he was sitting tight on his position.
The bonds were not easily available because most holders saw
little default risk for now, and needed to keep them as part of
their funds as a quasi-exposure to India.
Indian companies have not been prolific issuers of U.S.
dollar bonds and Adani's bonds with secured assets were seen as
providing direct, quality exposure to the fast-growing economy.
Sell-side banks, the money manager said, kept limited
inventory of the paper to avoid exposure to a group that was
still a risky bet given it was working through regulatory
scrutiny and attempting to placate investor unease created by
the short-seller's report.
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