Moody's Upgrades Outlook on JSW's Ratings to Stable
Moody's Investors Service has affirmed JSW Steel Limited's Ba2 corporate family rating and the Ba2 rating on the senior unsecured notes issued by JSW.
Moody's Investors Service has affirmed JSW Steel Limited's Ba2 corporate family rating and the Ba2 rating on the senior unsecured notes issued by JSW. At the same time, Moody's also affirmed the Ba2 rating on the senior unsecured notes guaranteed by JSW and issued by its wholly owned indirect subsidiary Periama Holdings LLC. The outlook on all ratings was changed to stable from negative. Moody's Vice President and Senior Credit Officer Mr Kaustubh Chaubal said "The rating affirmation and outlook change to stable are driven by a solid recovery in JSW's operating performance in the third quarter of fiscal year ending March 2021. We believe JSW will sustain the improvement over the next 12-18 months, enabling a recovery in its financial metrics to levels more appropriate for its Ba2 CFR. The rating action also reflects JSW's acquisition of Bhushan Power and Steel Limited (BPSL), which we view as strategic to the business. BPSL's value-added product offering and proximity to JSW's iron ore mines will further strengthen the company's business profile while adding scale.”
On 26 March, JSW announced that it has implemented the resolution plan to acquire BPSL for USD 2.6 billion from the distressed steel company's operational creditors. JSW will have an effective 49% stake in BPSL, whereas the balance 51% shareholding will be owned by a JSW promoter-owned company, JSW Shipping & Logistics Private Limited. The acquisition is being funded via USD 1.1 billion from the partners (JSW: USD 678 million; JSLPL along with other promoter entities: USD 470 million) and the balance USD 1.5 billion through a short-term bridge loan. BPSL's 2.75 million tons per annum capacity will enhance JSW's scale. And its diverse value-added product offering, strong market presence in eastern India and proximity to JSW's captive iron ore mines in Odisha will further strengthen JSW's business profile.