JSW Steel raising $500 million from overseas bond sale

Mumbai: Leading alloy-maker JSW Steel is entering the dollar bond market with a benchmark issue to raise up to USD 500 million in debt, sources said on Thursday.

The issue has received Ba2 rating with a positive outlook by global ratings agency Moody's Investors Service.

The fundraising is in line with a May 2017 board resolution to raise up to USD 1 billion in one or more tranches by selling bonds in the international markets, the company informed the exchanges.

Merchant banking sources confirmed that the company is looking to raise up to USD 500 million through the bond sale.

The company, one of the largest steel producers in the country with an installed capacity of 18 million tonnes per annum, informed the exchanges that its senior management will be holding roadshows in Hong Kong, Singapore and London next week for the bond issuance.

In a note, Moody's said proceeds from the issue will be utilised for retiring some debt and also for capital expenditure.

The company has USD 500 million of senior unsecured notes maturing in November and an equal amount in unsecured bonds maturing in April 2022, the agency said.

The rating reflects the company's large-scale and strong position in its key markets, good product and end market diversification, it added.

Meanwhile, its peer Fitch Ratings while assigning a 'BB' rating for the issue, said the rating reflects its highly competitive conversion costs and position as one of the largest steel producers in the country.

A further increase in planned capital expenditure, following a jump in planned capex in 2018, or significant weakening of global steel industry fundamentals could weaken its financial profile, it added.

The agency also cautioned about a likely moderation in the strong margins and risks from acquisitions.

The JSW Steel scrip closed 2.41 per cent up at Rs 294.85 on the BSE, as against a gain of 0.46 per cent on the benchmark.