Sole lead arranger Calyon successfully closed a €33.7mn ECA-backed transaction for Jindal Steel and Power (JSPL) in India. Signed in December 2007, it breaks new ground in structuring export credit financing in India.

The export credit agencies (ECAs) Coface and Cesce are supporting the export of equipment for the construction by JSPL of an integrated steel factory, with a capacity of 6mn tonnes per year, in the Indian state of Orissa.

The transaction is split into three tranches, two of which are covered by Coface in support of commercial contracts signed with the French suppliers Air Liquide Engineering and Stein-Heurtey. Cesce is backing contracts signed with the Spanish arm of Stein-Heurtey.

As requested by the borrower, Calyon structured the deal within a master credit agreement (MCA), which is the first time such a structure has been used for an ECA-supported transaction with a private borrower in India.

Under the terms of the agreement, further transactions can be completed within the framework. Such a structure brings increased flexibility to the borrower who can use it to access financing ‘on demand’.

Philippe Massiani, associate director, export finance Asia, at Calyon, explains: “Calyon has been able to win the mandate by enlarging the financing proposition to many supply contracts through the MCA concept.

“While MCA negotiation can be sometimes more cumbersome compared to a classical ECA-backed facility agreement, it brings flexibility and efficiency at a later stage when closing of various facilities can be implemented through a light and standardised documentation process. We hope to be able to use our scheme with JSPL again in the future.”

This facility also marks the first Coface-covered transaction to an Indian borrower in a number of years, and potentially hints at increased business flows between the French ECA and Indian companies, beyond the typical aircraft-related deals.

Orissa on the east coast of India is rich in minerals, and has attracted a high degree of foreign investment in its steel, power and aluminium sectors in recent years.

Orissa has been seen as a major hub for the India metals business. Back in 2005, a Morgan Stanley report predicted that the region had the potential to attract investments of up to US$30bn-40bn in the subsequent five years.

This project is one of many key metals-related developments that demonstrate Orissa’s potential to live up to these earlier predictions.

JSPL is also growing in strength, having reported growth in the production of all its major products during the third quarter of the financial year 2006-07. Steel products saw a 40% growth in production, while sales of steel products in the same time period increased by 33%.

JSPL is part of the US$8bn Jindal organisation, and is the largest private sector investor in the state of Chhattigisgarh, the Indian state on the eastern border of Orissa. The steel producer is also expanding its geographical boundaries, securing mining rights in Bolivia in July 2007. It has been granted rights over 20bn tonnes of iron ore reserves from El Mutun mines, one of the largest iron ore reserves in the world.


Deal Information:



Jindal Steel & Power
Amount: €33.7mn
Mandated lead arranger: Calyon
ECAs: Coface; Cesce
Tenor: 8-10 years
Law firms: Juris Corp (Indian legal advisor to the lender)
Date signed: December 2007