SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Brazilian steel producer Companhia Siderúrgica Nacional (CSN) was upgraded to B+ from B by S&P as the company’s mining unit CSN Mineração S.A. completed an IPO raising BRL 4.2bn ($780mn) from the primary and secondary stock offerings. Proceeds from the offerings will be used to expand iron ore volumes over the next few years. S&P expects CSN’s EBITDA to surge in 2021 on the back of rising iron ore prices. Volumes are also expected to grow to 38mn tons this year and 46mn tons in 2022 with strong domestic demand for flat steel allowing CSN to raise prices. This coupled with improved efficiency following refurbishment of its blast furnace should boost EBITDA and raise volumes by high single digits. S&P has a positive outlook on CSN, stating, “The positive outlook reflects our expectation of CSN’s continuing deleveraging in the next 12-18 months, with the maintenance of adjusted debt to EBITDA below 3.5x, funds from operations (FFO) to debt above 20%, positive free operating cash flow (FOCF), and ongoing debt refinancing strengthening its liquidity.”

CSN’s dollar bonds have been steadily rising over the past six months with its 7.625% 2023s and 7% perps currently trading at 104 and 100 respectively.

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