JSW Steel Raises $400 Million In Second Bond Sale This Fiscal
To cash in on the falling interest rates in the U.S., alloy major JSW Steel Ltd. on Tuesday raised $400 million in dollar money from global debt investors offering a coupon of 5.375 percent, making it’s the second issuance this fiscal.
This is part of the $1 billion dollar money raising plan the JSW Steel board had approved earlier this year and is the second tranche, having already mopped up $500 million in April, the company said.
In an exchange filing it said Tuesday evening that the proceeds from the $400 million bond sale will be used for capital expenditure and for other corporate purposes in accordance with the foreign exchange management rules of the central bank.
The company also said the issue has been given a ‘Ba2’ rating by Moody's and ‘BB’ by Fitch and will be traded on the Singapore exchange.
The five-and-a-half year bond will be issued on Oct. 4, and will mature on April 4, 2025 and investors will be offered 5.375 percent per annum, payable half-yearly, the company said.
Meanwhile, in a rating note from Singapore, Moody's assigned a ‘Ba2’ rating to the senior unsecured notes with a positive outlook.
"These notes rank pari passu with JSW's existing senior unsecured notes and are therefore rated at the same level as these notes, and also at the same level as JSW's Ba2 corporate family rating," Moody's said in the note.
The ‘Ba2’ ratings reflect JSW Steel's large scale and strong positions in its key operating markets, competitive conversion costs, good product mix and end-market diversification, and also the increasing focus on value-added products and retail markets, it added.
Moody's expects the domestic steel demand to grow at 5 percent over the next two years, supported by government infrastructure projects in the railways, roads and metro projects, even as auto and manufacturing demand stays soft.
JSW Steel, which has around 15 percent market share (by volume), will benefit from the supportive business conditions, the agency said.
"The latest notes represent JSW's second USD bond issuance this year and illustrates its proactive approach towards raising long-term finance before incurring capex. JSW also plans to issue rupee debt and raise foreign currency loans to diversify its funding sources," it added.
As of the June quarter, JSW Steel's secured debt constituted 41 percent of total debt, down from 71 percent in March 2014. The proposed issuance will further improve this split with the unsecured bonds rated at the same level as the group rating.