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JSW Steel taps loan worth $900 Million from eight foreign banks

19 Apr 2024 , 02:38 PM

JSW Steel, India's largest alloy maker, has received $900 Million from a group of eight international banks to restructure debt due this month and prepay certain high-cost borrowings.

The loan was priced 180 basis points higher than the international secured overnight financing rate (SOFR) prevailing earlier this month, according to various persons familiar with the matter.

The loan is co-underwritten by eight banks: Singapore's DBS Bank, Japan's Sumitomo Mitsui Banking Corp (SMBC), the UK's HSBC and Standard Chartered, France's BNP Paribas, the UAE's Mashreq Bank and First Abu Dhabi Bank, and Taiwan's CTBC Bank.

According to a source familiar with the matter, the company has upcoming repayments, including a $500 Million bond maturing this month. The funds raised will be allocated towards settling this debt along with other foreign currency loans, with any remaining amount directed towards capital expenditure. JSW Steel did not provide a response to an email inquiry.

JSW raised $500 million in April 2019 with a five-year bond at 5.95%, which is due for repayment this month. The loan proceeds will help the corporation repay the bond. The three-month SOFR is now trading at approximately 5.35%, and JSW will pay around 7.15% for the loan, which is 180 basis points above that rate.

Meanwhile, the bank consortium plans to do roadshows in Singapore and Dubai later this month to syndicate the loan. Syndication entails including more lenders in the loan deal for a charge. Usually, the lead arrangers pocket the majority of the loan for themselves.

JSW Steel, the leading entity within the $23 billion JSW Group, possesses a steel production capacity of 30 million tonnes and stands as one of the most cost-effective steel manufacturers worldwide. Presently, the company is engaged in a capital expenditure initiative aimed at expanding its capacity to 50 million tonnes by the fiscal year ending March 2031.

For feedback and suggestions, write to us at editorial@iifl.com

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