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Business Standard
06-05-2025
- Business
- Business Standard
SC ruling on BPSL likely to have adverse bearing on JSW Steel's financials
The Supreme Court ruling against JSW Steel's resolution plan for BPSL take over is likely to have an adverse bearing on the financials of the Sajjan Jindal-led steel major which may witness a 13 per drop in revenues, ratings firm CreditSights said on Tuesday. JSW Steel may also lose its competitiveness along India's mineral-rich east coast, where BPSL's steel plant is located, the FitchSolutions company said in a report. CreditSights said it views that the loss of BPSL as modestly credit negative for JSW (Steel). Last week on Friday, the Supreme Court set aside a resolution plan submitted by JSW Steel for BSPL, holding it illegal and in violation of the Insolvency and Bankruptcy Code (IBC). A bench comprising Justices Bela M Trivedi and Satish Chandra Sharma criticised the conduct of all key stakeholders in the resolution process -- the resolution professional, the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT) -- for enabling what it termed a "flagrant violation" of the IBC, and ordered the liquidation of BSPL under the IBC. CreditSights said if JSW Steel fails in its attempts to save the BPSL asset, the company will have to surrender BPSL back to the NCLT, resulting in a deconsolidation of BPSL's financials. "The deconsolidation (of BPSL) will inevitably reduce JSW's pro-forma steelmaking capacity by 13 per cent, steel production by 13 per cent, revenue by 13 per cent, and EBITDA by 9 per cent," it said. In FY25, JSW Steel produced 26.98 MT crude steel, posting a 6 per cent year-on-year rise over 25.55 MT in FY24. In October-December quarter of FY25, the company saw its net profit slashing almost three-fold to Rs 719 crore from Rs 2,450 crore in same period of the preceding financial year. The company also saw its total income falling to Rs 41,525 crore in the third quarter of FY25 from Rs 42,134 crore in the year-ago period. In April-December (9M FY25), the company's net profit was at Rs 7,651 crore, down from Rs 8,873 crore in the nine-month period of FY24. JSW Steel is scheduled to report its financial numbers for the fourth quarter and entire FY25 on May 23. The steel maker acquired Bhushan Power & Steel (BPSL) in September 2019 after the National Company Law Tribunal (NCLT) approved its resolution plan. The acquisition was completed in March 2021. JSW Group Chairman Sajjan Jindal had said that the acquisition of BPSL marks JSW Steel's entry into the eastern region. The acquisition not only aligns with core business and purpose but also establishes presence and accelerates growth vision in eastern India, Jindal had said in a letter to BPSL employees. Located in Odisha's Jharsuguda, BPSL recorded a crude steel production capacity of 3.38 million tonnes (MT) in FY25. JSW Steel had envisaged ramping up BPSL's capacity to 5 MT, eyeing to benefit from the higher sales and realisations from value-added products such as colour-coated, galvanised sheets, pipes and wires. The report further said that if BPSL goes out, JSW will lose its competitiveness along India's mineral-rich east coast, which BPSL primarily serviced and operated in. CreditSights also suggested JSW to approach the apex court for a review of the order. "In the review, we believe JSW may propose changing the resolution plan to be fully equity funded or convert the debentures to equity, given the use of debt was a key factor resulting in the SC's rejection of the plan," it said. The company could offer penalties and fines for late payment of creditor dues too. If the review is unsuccessful, JSW can then file a curative petition intended as a final recourse in India's legal system, that will be decided by a larger bench. If the SC does not reverse its ruling, JSW would have to surrender BPSL assets to NCLT/lenders. The capex incurred and capacity added subsequently at BPSL will complicate the process, unless the added assets are carved out of the divestiture. A query seeking response of JSW Steel remained unanswered.
CNA
05-05-2025
- Business
- CNA
Apple's first bond offering in 2 years headlines busy primary
Apple is planning a four-tranche bond offering on Monday, its first in two years, using proceeds to repurchase stock and repay outstanding debt, among other purposes, the company said in an SEC filing. The offering size was not stated but CreditSights analysts expect it to raise nearly $5 billion to $6 billion, noting that Apple has $8 billion in debt maturing from May through November. Eight other issuers in the investment-grade primary market are also expected to kick off an unusually active week with estimated total of nearly $35 billion of new debt offerings. These include notes from Comcast, DTE Electric Co and General Motors. New bond supply is rising as credit spreads, or the premium companies pay over Treasuries, have rebounded in the weeks since U.S. President Donald Trump first announced harsh tariffs and then provided temporary relief. Many issuers had planned offerings sooner but were thrown off by the uncertainty of Trump's policies. They are rushing to market before the Federal Reserve meets on Wednesday to avoid the typical volatility that immediately follows the Fed chair's comments after such monthly policymaking meetings. Demand is expected to remain strong as uncertainty pushed investors to look for safety in higher-rated bonds, analysts said. The issuance rush follows six consecutive weeks of outflows from investment-grade funds, the longest streak since November 2022, noted Dan Krieter, director of fixed income strategy at BMO Capital Markets. "It's a pretty attractive space to lock in these all-in yields," said Natalie Trevithick, head of investment grade credit strategy at Los Angeles-based asset manager Payden & Rygel. The average investment-grade bond spread was at 106 basis points on Friday, the latest data shows, or three basis points lower than levels touched the day before. "The issuance is a lot of high quality names today, (and) a lot of it is just regularly planned issuance. There are probably a couple deals that got pushed back from April," Trevithick noted.
Bloomberg
01-05-2025
- Automotive
- Bloomberg
GM's $5 Billion Tariff Hole Is Still Dangerously Deep
General Motors Co. confirmed on Thursday that half a hole is still a hole. The company issued updated guidance for 2025, which had been delayed from Tuesday in order to accommodate another iteration of President Donald Trump's auto tariffs thinking, which evolves faster than your average flu virus and feels about as good. Chief Executive Mary Barra kicked off the call by noting that GM is 'grateful to President Trump for his support of the auto industry.' Listening remotely, I couldn't quite detect the grinding of her teeth but that didn't matter — the new guidance revealed the truth. During the intervening 48 hours, Trump visited Detroit as part of a Day 100 victory tour to shore up his sagging polling. He announced some relief measures for US auto manufacturers from his own tariffs. The two main concessions involved preventing the stacking of auto-related country tariffs on top of general ones, especially those placed on imported steel and aluminum, and offering a rebate on tariffs placed on auto parts linked to vehicle prices. The latter lasts for two years and tapers down over that time. Assuming an average sticker price of $50,000, the rebate in the first year is worth about $1,900 per vehicle, reducing the impact from auto parts tariffs by about 50%, CreditSights estimates.
Bloomberg
22-03-2025
- Business
- Bloomberg
US Chaos Helps to Pull China Debt Out of Doldrums
US market turmoil triggered by tariffs and a slowing economic outlook is boosting the appeal of Chinese corporate debt that less than six months ago was considered uninvestable by some credit managers. 'There's been a lot more focus on China,' Winnie Cisar, global head of strategy at CreditSights, said on the Credit Edge podcast this week. 'The US seems to be sneezing an awful lot lately and the rest of the world is saying: Well how do we mask up and try to defend ourselves against this?'
Bloomberg
21-02-2025
- Business
- Bloomberg
A Lot of Optimism Priced Into Credit Spreads: Cisar
CreditSights Global Head of Credit Strategy Winnie Cisar and JPMorgan Private Bank Global Credit Strategist Ashley Allen speak to Bloomberg's Sonali Basak about historically tight spreads and risk appetite on "Bloomberg Real Yield." (Source: Bloomberg)
