Distressed Indian Company to Sell Junk Bonds Yielding 21%

Bookmark

Distressed Kesoram Industries Ltd. is set to sell junk-rated rupee bonds that yield as high as 21%, a rare issuance in India’s local-currency debt market where most borrowers have AA ratings or higher.

Cement manufacturer Kesoram Industries will raise 16.04 billion rupees ($221 million) from the notes that mature in February 2026, according to people with knowledge of the matter, who asked not to be identified. The securities are rated D by Crisil and carry a coupon that increases in stages the longer they are outstanding, the people said.

Kesoram Industries defaulted on debt last year and the company’s finances have worsened amid intense competition in the cement business. The Kolkata-based company, whose history dates back over 100 years, this month allotted equity shares and preference securities to 10 creditors as part of its plan to restructure its debt.

On Monday, investors bid for Kesoram Industries’ notes on an electronic platform provided by the stock exchange, where the company had sought bids for the offering. Later, the issuer accepted the orders. The low-rated debt sale is an oddity in the local bond market, where state-owned issuers or companies with high ratings dominate bond offerings.

Proceeds from Kesoram Industries’ offering will be used in part to repay existing loans and overdue liabilities. The company hadn’t complied with certain financial covenants and defaulted on 4.6 billion rupees of debt as of Dec. 31, the company said in a statement last month.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.