JSW Steel raises $1 billion via bonds issuance in overseas market

The company says it is the first in the steel sector globally to issue an SLB in a hard currency

JSW Steel has raised $1 billion through the issuance of sustainability-linked bonds (SLBs) in the overseas market.

The company said that it had “created history” by being the first company in the steel sector globally to issue an SLB in a hard currency. A statement said that it had raised a total of $1Billion in the USD bond markets through a RegS/144A issuance, which was subscribed by high quality institutional investors across Asia, Middle East, Europe and the US.

Seshagiri Rao, joint managing director and group CFO, JSW Steel, said that the overwhelming response received on the SLB issuance was testimony of stakeholder confidence in JSW’s commitment to climate change mitigation.

“The target set by JSW is significantly steeper than that committed as per the India’s Nationally Determined Contributions (NDC) and is aligned with the Sustainable Development Scenario (SDS) pathway by way of targeting a 42 per cent reduction of CO2 emission intensity from the base year of 2005,” he added.

The proceeds from the issue will be used for funding capex plans as well as for refinancing of debt.

The issuance comprised two tranches of 5.5 years and 10.5 years, each for an amount of $500mn. The 10.5-year tranche was issued as an SLB where the company has committed to a target of achieving ≤1.95 tonnes of CO2 per tonne of crude steel produced, by March 2030, representing a 23 per cent reduction from its 2020 levels.

As per the SLB terms, if the company is not able to meet the targets by March 2030, the pricing on the bonds will be stepped up by 37.5bp for the residual life of the bonds.

The SLB structure helped the company attract ESG-focused funds. “The SLB is a win-win for both issuers as well as investors - it benefits investors by giving them an avenue to invest in socially responsible companies while providing the right incentive structure to companies to improve their ESG performance and diversify their resource base for long term financing,” the company said.