 "JSW USA to raise $145 mn loan for capex Moody's affirms stable ratings")
JSW Steel USA, a unit of the Indian conglomerate, is raising $145 million to finance capital expenditure and improve slab casting machines and other facilities at its plant in Jefferson County in Ohio.
The Jefferson County Port Authority has proposed to issue the company $145-million bonds, which have got 'Ba1' rating from Moody’s. Proceeds from the bond will be loaned to JSW Steel USA Ohio, Inc (JSW Ohio). The tax-exempt senior unsecured bonds will be guaranteed by JSW and carry a tenor of around 30 years, said Moody’s in a statement.
Moody's also affirmed JSW's Ba1 corporate family rating (CFR). It also affirmed Ba1 ratings on JSW's senior unsecured notes, and the $40 million guaranteed senior unsecured revenue bonds issued by the port authority.
The rating agency maintained the stable outlook on JSW, saying that the company will remain prudent in capital allocation and maintain its good liquidity position.
JSW's balance-sheet liquidity is good and it has cash and cash equivalents of about $1.3 billion as of September 30, 2023. The cash and cash equivalents and expected operating cash flow of some $4.5 billion over 18 months until March 2025 will be enough to cover the company’s scheduled debt repayments (including short-term borrowings) and dividends.
The company’s reliance on long-term external financing will be critical, as its annual capital expenditure remains elevated at $2 billion, Moody’s said.
The company will likely to fund its capital expenditure through a mix of internal accruals and incremental debt, and by proactively securing external funding ahead of its investment plans. It already has some $1.7 billion in undrawn long-term loans to partially fund its upcoming investments, in line with its judicious risk management policies.
JSW will continue to rely on its undrawn $2.7 billion fund and non-fund-based short-term, committed 364-day working capital facilities, given the inherently volatile cycles of the steel industry and the company's intra-year working capital needs, it said.