POSCO Successfully Issues USD 1 Billion Dollar Bonds in the US... Largest by a Domestic Private Company

Strengthening Cash-Centric Management

Kim Hak-dong, Vice Chairman of POSCO. [Photo by POSCO]

[Asia Economy Reporter Jeong Dong-hoon] POSCO has succeeded in issuing the largest overseas bonds among domestic private companies this year.

On the 28th, POSCO issued a total of $1 billion (approximately 1.2967 trillion KRW) in 'Dual-Tranche' global bonds, including $700 million (approximately 907.9 billion KRW) with a 3-year maturity and $300 million (approximately 389.1 billion KRW) with a 5-year maturity, marking its first overseas bond issuance since the establishment of its new subsidiary in March. Dual-Tranche refers to issuing two types of bonds simultaneously with different maturities or interest rate conditions.

The bonds issued by POSCO this time were the first dollar-denominated public bonds issued in the global market immediately after the U.S. Federal Reserve raised its benchmark interest rate by 0.75 percentage points on the 27th (local time). Successfully issuing bonds amid high financial market volatility has recognized them as high-quality bonds.

Moreover, despite high uncertainties such as economic slowdown due to the Russia-Ukraine conflict and concerns over decreased steel demand, the $700 million 3-year bonds were issued at a favorable spread of 1.6 percentage points over U.S. Treasury bonds, and the $300 million 5-year bonds at 1.85 percentage points, based on strong demand for safe assets from major global investors.

By successfully securing proactive funding to prepare for further interest rate hikes and liquidity tightening, POSCO has been able to further strengthen its cash-focused management under an emergency management system.

Prior to this bond issuance, POSCO conducted roadshows targeting numerous investment institutions in the U.S., Europe, and other regions from the 10th to the 17th of this month, and held an investor briefing via conference call for over 50 global investment institutions a day before the issuance date to share its global steel investment plans and growth strategies.

Meanwhile, the international credit rating agency Standard & Poor's (S&P) upgraded POSCO's credit rating from BBB+ to A- last month on the 28th, noting that POSCO's EBITDA (earnings before interest, taxes, depreciation, and amortization) margin is the highest and most stable in the global steel industry, marking the first upgrade in 10 years.

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