Indian companies plan to reduce interest costs

Indian companies plan to reduce interest costs

At the beginning of 2003, Jindal Vijaynagar, Ispat Industries and Essar Steel have restructed their debts. Currently, these companies are going to increase overseas loans to reduce their interest costs. The total of the external commercial borrowing (ECB) will amount to $650 million. Institutions and banks will help these companies obtain easier credits from the overseas market. Also, investment bankers stated that aforementioned companies can obtain credit around 150-200 basis points over the London Interbank Offered Rate (LIBOR). LIBOR interest rates are 1.8%, including guarantee commission, compute as 5.6%. This will allow companies to reduce interest costs by 8% while they are paying 14% on their liabilities. Both Jindal and Ispat are planning to receive around $225 million ECB while Essar plans to get $200 million.