JSW Steel secures $900M loan for debt refinancing & expansion

JSW Steel secured $900 million from eight foreign banks to refinance imminent debt and pre-pay high-cost borrowings.

JSW Steel, India’s top alloy manufacturer, secured $900 million from a group of eight foreign banks to refinance expiring debt and pay off high-interest loans. The loan, set 180 basis points above the SOFR, involved banks like DBS, BNP Paribas, HSBC, Standard Chartered, Mashreq Bank, First Abu Dhabi Bank, SMBC, and CTBC Bank.

A significant portion, including a $500 million dollar bond maturing this month, will be used for repayments. The rest will tackle foreign currency debts and fund capital expenses. The company’s silence on the matter was evident, with responses sought from JSW Steel and various banks.

JSW previously raised $500 million via a five-year bond in 2019, set at 5.95%, which also matures now. The loan’s terms peg it at approximately 7.15%, considering the current SOFR at 5.35%. The consortium plans to expand the loan through syndication, typical in such agreements.

JSW Steel, part of the $23 billion JSW Group, aims to expand its capacity from 30 to 50 million tonnes by 2031. Fitch maintained its ‘BB’ rating with a stable outlook last year, contingent on debt-to-operating-profit ratios and cash flow. However, CLSA downgraded JSW Steel due to pricing pressure from supply exceeding demand.

The company’s capital expenditure reached ₹13,249 crore from April to December, with an estimated annual spend of ₹18,000 crore. Additionally, the JSW Group pledged ₹65,000 crore for an integrated steel plant in Odisha. Despite a slight increase in debt-to-operating-profit ratio, the company continues its expansion plans.