• Source:JND
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Significantly, the largest government-owned insurer in the nation, Life Insurance Corporation of India (LIC), has purchased the entire Rs 5,000 crore loan bond (also known as a non-convertible debenture, or NCD) issued by Adani Ports and Special Economic Zone. The agreement, which closed on Thursday, represents a strategic change for Adani Ports as it substitutes long-term, less expensive debt for expensive, short-term loans.

The bond offers an annual coupon rate of 7.75% and has a 15-year maturity. In recent years, no Adani Group company has issued a domestic bond with the longest maturity. Notably, LIC already owns 8.06% of the equity in Adani Ports and is the only investor in this offering.

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The company plans to use the bond issue proceeds for new investments, loan repayment, and other business needs, according to reports in The Economic Times.

Adani Ports' larger plan to optimise its capital structure includes this action. The business has made a concerted effort to lower borrowing costs and extend loan terms during the last 12 months. Adani Ports has successfully lowered its average borrowing cost from 9.02% in FY24 to 7.92% in FY25 through refinancing efforts.

This transaction highlights LIC's increasing desire for premium corporate bonds, according to a bond market expert from a domestic brokerage firm. It is projected that LIC will have invested Rs 80,000 crore in these instruments by the end of FY25.

With net debt of Rs 36,422 crore and EBITDA of ₹20,471 crore as of March 31, 2025, Adani Ports had a healthy net debt-to-EBITDA ratio of 1.78x, which is better than the 2.3x ratio from the previous year.

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With properties in Israel, Tanzania, Australia, and Sri Lanka, Adani Ports has increased its global footprint and now runs 15 ports and terminals throughout India. In FY24, the company's ports handled 450 million metric tonnes of cargo, with a combined capacity of 633 million metric tonnes.

Although neither LIC nor Adani Ports have made any official statements regarding the bond deal, it is evident that both parties have faith in Adani Ports' long-term growth prospects and financial strategy.