Tight liquidity makes Adani dollar bonds a tough buy or sell

Adani Green Energy bonds due in 2024, were up at about 75 cents on the dollar on Friday after hitting a record low of about 62 cents last week which were were trading at about 95 cents before the short-seller report.

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 January 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.