Abstract

This case talks about the international bond issue of Adani Ports and Special Economic Zone (APSEZ), the first ever international issue of long-term bonds by any infrastructure company from India. Senior Unsecured Long-Term Bonds for US$750 million with maturities of 10.5 years and 20 years were issued by APSEZ in two tranches starting July 2021. The bond issue was oversubscribed by more than 3 times, in spite of not being ‘A’ rated by foreign credit rating agencies. The management of APSEZ was of the opinion that the success of the issue was an authentication of APSEZ’s long term solvency. The case provides the scope to bring in many relevant dimensions related to bond issues such as why companies issue bonds and the various risks related to bond issues. Additionally, it helps the students learn about the calculation of Current Yield, Yield to Maturity, and Yield to Call using APSEZ’s long term issue.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• To understand why corporates go in for long term bond issue
• To explore the advantages and disadvantages of long-term unsecured bonds for investors
• To understand the various risks associated with the bond issue
• To understand how to calculate CY, YTM, and YTC with the help of real data

Keywords

Bond; Long-term Bond; Current Yield; Yield to Maturity; YTM; Yield to Call; Long-term Source of Financing; Reinvestment Risk; Call Risk; Inflation Risk; Exchange Rate Risk; Trial and Error Method; MS Excel YIELD function