Mumbai: Sajjan Jindal-promoted JSW Steel is in the market to raise up to $1 billion in dollar-denominated non-convertible bonds, the company informed stock exchanges on Friday.
The company did not say in the notice how the funds will be used, but JSW Steel is expanding capacity at its flagship Vijayanagar steel plant from 13 million tonnes per annum to 18mtpa.
The company will meet with investors and conduct roadshows in Hong Kong, Singapore, and London next week, the note said. Deutsche Bank will be the lead banker in the fund-raising.
JSW Steel is one of the largest producers of steel products in India, with an installed steelmaking capacity of 18 million tonnes per annum.
The company’s net debt stood at ₹46,000 crore, at the end of December 2018. The debt to Ebitda ratio was 2.32. Ebitda is earnings before interest, tax, depreciation and amortization. JSW Steel had earlier announced a capital expenditure plan of ₹44,415 crore to increase its total capacity to 24.7mtpa by FY21, by way of brownfield expansion and acquisitions.
Moody’s has assigned a Ba2 rating to JSW Steel’s proposed bond issue, with positive outlook, the credit rating agency said. The proposed notes are rated Ba2 and rank pari passu to the company’s $500 million senior unsecured notes maturing in November 2019 and the $500 million senior unsecured bonds maturing in April 2022.
“The Ba2 rating continues to reflect JSW’s large scale and strong position in its key markets, good product and end-market diversification, and increasing focus on value-added products and retail sales," said Kaustubh Chaubal, a Moody’s vice president and senior credit officer. “The company’s credit metrics retain their improving trajectory, principally due to competitive and efficient production costs, solid domestic demand conditions and a supportive price environment, even as input costs register a slight increase," Chaubal said.
JSW Steel is also close to acquiring bankrupt steel firm Bhushan Power and Steel for an upfront cash payment of Rs19,350 crore and an equity infusion of Rs350 crore to revive the steel mill’s operations. In March, the company closed a $700 million, five-year advance payment and supply agreement with steel trading firm Duferco International Trading Holding SA, which would offer JSW Steel a committed export market for its products.