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JSW Steel plans $500 million bond offering to global investors

The selected banks are likely to include prominent US and European banks as well as some Japanese financiers who have loaned money to the company in the past.

, ET Bureau|
Sep 23, 2019, 07.53 AM IST
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The bonds offer a coupon of 5.95% to investors.
MUMBAI: JSW Steel plans to launch a $500-million bond offering to global investors this week, according to people aware of the matter. The Sajjan Jindal-promoted steel maker finalised 11international banks over the weekend to manage the proposed issue, though it has yet to make the names of the book runners public, they said.

The proceeds from the proposed sale of bonds will be used to refinance some existing loans and also bolster the company’s reserve of funds for use towards general corporate purposes, said a person, who did not wish to be identified.

The selected banks are likely to include prominent US and European banks as well as some Japanese financiers who have loaned money to the company in the past.

“We do not want to comment on speculation,” a senior JSW Steel executive told ET in response to a query.

This would be the third such offering by the steel maker overseas, after it raised a similar sum of money two years ago and then followed it up with another successful issue in April this year. The two past issues took its tally of funds raised through overseas bond offerings to $1 billion.

JSW Steel, which is competing with Tata Steel to be the country’s top-ranked steel producer, has been adding capacities at its plant in Karnataka and is also scheduled to close its acquisition of Bhushan Power and Steel, for which it recently received an approval from the National Company Law Tribunal.

The company’s recent offering of $500 million bonds to investors was rated Ba2 or one notch below investment grade by ratings agency Moody’s.

The bonds offer a coupon of 5.95% to investors.

“India’s steel demand will remain the strongest in Asia but slow to mid-single-digit growth, as weak auto and manufacturing demand offsets demand growth in the infrastructure and construction industries,” Kaustubh Chaubal, vice president at Moody’s, said in a recent note to investors.

Moody’s revised its outlook on Asian steel producers to negative from stable on August 28 on the grounds that an increase in input costs was scheduled to adversely impact the profitability of the steel producers.
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