Distressed Funds Including Oaktree Scoop Up Adani Bonds

Hedge funds and distressed debt specialists have scooped up bonds related to Gautam Adani’s business empire as they look to capitalize on falling prices in the aftermath of a scathing short-seller report.

(Bloomberg) — Hedge funds and distressed debt specialists have scooped up bonds related to Gautam Adani’s business empire as they look to capitalize on falling prices in the aftermath of a scathing short-seller report.

Oaktree Capital Management, one of the world’s largest opportunistic debt firms, and Davidson Kempner Capital Management were among those buying the debt in recent weeks, according to people familiar with the matter. 

Distressed funds have been actively trading the bonds from their Asian offices, according to a person familiar with the matter, who asked not to be named as the deals aren’t public. It’s not clear whether the firms already held Adani bonds prior to US short-seller Hindenburg Research publishing its report on Jan. 24.

The market value of Adani’s network of businesses more than halved after Hindenburg said the group inflated revenue and stock prices. The conglomerate has repeatedly denied Hindenburg’s allegations of corporate wrongdoing and threatened legal action.

Representatives for Oaktree and Davidson Kempner declined to comment. The Economic Times earlier reported details of distressed funds buying Adani’s bonds. 

On a call with clients last week, trading executives at Goldman Sachs Group Inc. said Adani securities had drawn interest from opportunistic investors amid an equity rout and a debt slump that pushed some bonds to distressed levels. 

The Goldman Sachs traders said Adani debt had hit a floor in the short term and bonds of Adani Ports & Special Economic Zone Ltd. had become interesting at the current price. The price of those bonds rose in the following days as investors looked to capitalize on the potential for a rebound. 

Read More: Goldman, JPMorgan Say Adani Debt Offers Value to Clients (1)

Adani Ports said earlier Tuesday it will repay around 50 billion rupees ($604.6 million) of debt in a bid to improve its leverage metrics.

–With assistance from Catherine Bosley.

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