Essar Steel delays benchmark bond issue

Essar Steel delays benchmark bond issue

Mumbai: Essar Steel, which had been looking to issue a benchmark-sized US dollar bond, said on Thursday it has put the deal on hold, a week after a sister firm cut the price of a London IPO amid jittery markets.

The delay in the bond offer, which had been the subject of market speculation, was revealed as Asian bond spreads widened to three-month highs on fears Greece’s mounting debt problems would spread to other weaker euro zone economies and stymie the budding global economic recovery.

“The company believes that it will be much better placed to achieve their desired result in the debt capital markets following the near to medium term and so has decided to postpone their planned financing for the time being," an Essar spokesman said in a statement.

A benchmark-sized bond issue in Asia typically means a deal that raises at least $500 million.

Unlisted Essar Steel is part of the Mumbai-based conglomerate Essar Group, whose Essar Energy unit raised about $1.95 billion in a London initial public offering that was priced last week below its initial target range.

“In the meantime we will keep investors informed about the progress of Essar Steel Holdings and its subsidiaries and want to build on the relationships we were able to develop with investors over the last few weeks," the statement said.