LIC picks up APSEZ’s entire Rs 5K cr issue
MUMBAI : State-owned Life Insurance Corporation (LIC) on Thursday entirely subscribed to the ₹5,000 crore bond issue of Adani Ports and Special Economic Zone (APSEZ) at a coupon rate of 7.75 per cent, said sources privy to the development.
APSEZ tapped the domestic capital market on Thursday to raise ₹5,000 crore through 15-year bonds. This was its largest-ever rupee-denominated bond issue and also its first 15-year bond sale.
“There was only one bid from LIC and it was a pre-approved, privately negotiated transaction. No other bids were received, and since it wasn’t a market-based issuance, there was no green shoe option either,” said a source aware of the development, adding that it’s possible that the company was concerned about having to offer a higher coupon rate had it come to the broader market.
“And the tenure was quite long, which typically doesn’t attract banks. Perhaps other insurance firms or provident funds could have participated, but Adani approached only LIC for this transaction,” the person added.
The proceeds of the bond issuance will be used by the company to refinance/ repayment/ prepayment of its existing debt obligation. Additionally, it will be used for capital expenditure towards the development of the port and its related infrastructure.
“Adani Ports, India’s largest private port operator, has raised ₹5,000 crore through a 15-year domestic bond issuance at 7.75 per cent– marking its longest-tenor and largest rupee debt deal to date. Such extended tenors are rare for private issuers in India’s bond market, where issuances typically cap at 10 years. The coupon, priced approximately 126 bps above comparable government securities, reflects strong and increasing investor appetite amid favourable market conditions,” said Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP.
APSEZ is the largest private port operator in India with a capacity of 633 MMT. It handled 450 MMT cargo in FY25.
APSEZ operates a portfolio of 15 domestic ports/terminals with international presence at four global ports/terminals. Along with its port operations, it has its wide logistics network and offers various port based marine services to its owned ports/terminals as well as other ports.
According to a recent rating note by domestic rating agency Crisil, APSEZ’s bank loan facilities and non-convertible debentures have been rated “AAA” while its commercial papers have been rated A1+.
Additionally, recently global rating agency Fitch Ratings has affirmed APSEZ’s long-term foreign-currency issuer default rating at ‘BBB-‘ and removed it from rating watch negative.
Emails sent to Adani Group and LIC did not elicit a response.
In January 2024, APSEZ tapped the domestic debt capital market to raise ₹250 crore through 10-year papers at 8.80 per cent. In January 2024, yields on 10-year government securities was hovering around 7.2 per cent.
LIC is one of the largest institutional investors in the domestic debt capital market. In FY25 alone, it invested ₹ 80,000 crore in bond issuances of Indian companies, up 30 per cent from last year.
Meanwhile, apart from APSEZ, other Indian corporates who tapped the market on Thursday had a tough time raising the entire quantum they had intended to raise. Marquee companies, including Bajaj Finance, Tata Capital, National Bank for Financing Infrastructure and Development, and APSEZ were among the companies who cumulatively were eyeing over ₹13,000 crore
National Bank for Financing Infrastructure and Development, which was in the market to raise ₹5,000 crore (base issue ₹2,000 and ₹3,000 crore green shoe), retained only ₹2,100 crore at 6.67 per cent through 5-year papers.
