JSW plans to raise $500 mn to part-refinance rupee debt

With the aim to refinance a part of its rupee debt, JSW Steel is planning to raise $500 million through a bond sale to investors in Asia and Europe, investment banking sources said.

The roadshows for the bond sale would start next week and the company representatives would visit Singapore, Hong Kong and London to woo investors, they added.

Confirming the schedule of the roadshows, JSW Steel's Jt. Managing Director and Group CFO M V S Seshagiri Rao told PTI that the proposed bond sale was aimed at refinancing part of the rupee debt and aimed at reducing the interest outgo.

He, however, did not confirm the amount, tenor and timing of the bond, saying the call would be taken on the movement of the market which is "a little stable" now.

JSW Steel has Rs 35,750 crore net debt out of which 35% is in foreign currency.

In a statement to the stock exchanges, JSW Steel said it "is contemplating issuing of debt instruments in the form of US Dollar denominated senior notes. The notes, if issued, will be listed on the Singapore Stock Exchange."

"A preliminary offering circular has been prepared and shall be made available to prospective investors in relation to the contemplated issue of notes. The notes will not be offered or sold in India or in the US," JSW Steel added.

Meanwhile, the company has been assigned Ba 1 rating with stable outlook by Moody's and BB+ rating with stable outlook by Fitch.

Moody's said JSW Steel's Ba1 rating reflects its large scale and competitive conversion costs and its track record of managing growth, both organic and by acquisition, while at the same time controlling consolidated leverage to moderate levels relative to its steel industry peers.

Fitch assigned JSW Steel a senior unsecured rating of 'BB+' and the company's proposed US dollar denominated notes an expected rating of 'BB+'.

Fitch said JSW Steel benefits from its low cost base due to its low conversion costs. It's efficient operations were reflected in its strong profitability, with EBITDA margin of 17.9 per cent in FY'14.

The rating agency expects JSW Steel's profitability to remain strong over the medium term because it would continue initiatives to reduce costs.