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March 21 (Bloomberg) -- Jindal Steel & Power Ltd., India’s second-biggest steelmaker, hired banks to arrange a $400 million loan, four people familiar with the matter said.

The five-year term facility may pay an all-in rate, which includes interest margin and fees, of as much as 350 basis points more than the London interbank offered rate, the people said, asking not to be identified because the details are private.

Ravi Muthreja, a New Delhi-based spokesman for the company, didn’t immediately respond to an e-mail and two telephone calls seeking comment on the financing.

Jindal Steel plans to raise as much as 120 billion rupees ($2.2 billion) of debt in the coming two years to expand capacity and sate demand arising from federal infrastructure spending, Group Chief Financial Officer Sushil Maroo said in a March 6 interview. That includes $300 million of foreign-currency bond sales, he said.

Shares in Jindal Steel rose as much as 4.8 percent in Mumbai before closing 1.2 percent higher at 341.7 rupees. The company has about $3.3 billion-equivalent of bonds and loans outstanding, according to data compiled by Bloomberg.

Australia & New Zealand Banking Group Ltd., Bank of America Corp., Barclays Plc, BNP Paribas SA, Credit Agricole SA, Deutsche Bank AG, Royal Bank of Scotland Group Plc and Standard Chartered Plc will help arrange the borrowing, the people said today.

The 120 billion rupee debt is part of Jindal Steel’s 200 billion rupee capital expenditure program for the two years ending March 31, 2015, by which time it plans to double steelmaking capacity and triple electricity generation capacity. The spending also includes expanding steel capacity in Oman and buying iron ore and coal assets.

To contact the reporters on this story: George Smith Alexander in Mumbai at; Anurag Joshi in Mumbai at; Abhishek Shanker in Mumbai at

To contact the editors responsible for this story: Shelley Smith at; Philip Lagerkranser at

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