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JSW Steel obtains five-times higher bids for $1 bn offshore bond sales

JSW Steel obtains five-times higher bids for $1 bn offshore bond sales

15 Sep 2021

MUMBAI: received more than five times higher bids for its $1 billion overseas bond sales that opened for subscription Wednesday.

JP Morgan Fleming Asset Management, HSBC AM, Value Partners, Hong Kong-based GaoTeng, State Bank of India and Ninety One UK were bidders among others, market sources told ET.

The company obtained subscription bids worth $5.5 billion. The issue was not yet closed until the press time.

ET wrote on September 6 that the company was set to raise offshore bonds to fund capacity expansion and lower fund costs.

Deutsche Bank, Credit Suisse, Standard Chartered, MUFG, BNP Paribas helped the company raise the funds along with a few others.

Individual bidders could not be contacted immediately for comments. JSW Steel declined to comment on the matter.

Bonds were of two sets of maturities – 5.5 years and 10.5 years. Those were priced up to 45 basis points tighter than initial price guidance.

The longer maturity bonds are marked with “Sustainablility Linked Bonds”, similar to ESG (Environment Social Governance) tag. An ESG tag helps cut borrowing cost as proceeds are used for a dedicated cause. Those securities finally offered 5.05 percent.

The shorter duration papers, which were vanilla dollar bonds yielded 3.95 percent, about 43 basis points lower than the initial offer.

The proceeds would be used to build capacity and lower fund costs with the local economy opening up fast following the vaccination drive.

“The response is nothing short of stupendous,” said Amrish Baliga, managing director & head – financing, Deutsche Bank India. The bond sale (in tranches) has created many firsts, which translated into an epic offering from the Indian subcontinent.”

Moody’s Investors Service changed the outlook on JSW Steel Limited and Periama Holdings LLC ‘s ratings to positive from stable last week. Moody’s has also affirmed JSW’s Ba2 Corporate Family Rating (CFR) and its Ba2 senior unsecured notes rating.

“The outlook change to positive reflects our view that JSW’s better-than-expected operating performance this fiscal year will help to sustain its deleveraging,” it said in a note.