Advanced Theory & Practice of Bonds

IBF Recognized Under FTS
1-2 December 2021

Two-day immersive course on bonds designed for private bankers and advisors. 90% funding* available to eligible company-sponsored candidates.

US Steel has been upgraded to B from B- with a positive outlook by S&P on debt reduction amid the strong cash flows due to the all-time high steel prices in 2021. Big River Steel has also been upgraded to B with a positive outlook following the upgrade of the parent US Steel. US Steel’s debt more than doubled to $5bn in 2018-20 as it invested ~$3bn in its operations since 2018 and also acquired Big River for ~$1.5bn and its debt load of $1.88bn. The steel major has since reduced its capital budget to ~$675mn for 2021 and has optimized it’s capacity through measures including closing some mills to improve its cash flow. Record steel prices have helped it reverse three years of negative free cash flow, and the company generated over $1bn of free cash flow in 2021 according to S&P estimates. The rating agency said, “U.S. Steel has begun reducing debt after investing $6 billion in its operations and for acquisitions in the last three years, and the company’s long-standing pension deficit has turned to a surplus for the first time in decades.”

While debt levels of US Steel rose after the acquisition of Big River Steel in January 2021, the company is expected to repay more than $500mn of unsecured debt in 2021 leading to an overall debt reduction. In fact, the acquisition is now helping U.S. Steel’s credit quality as it benefits from cash distributions if the subsidiary meets the covenants and restrictions under its credit agreements. The rating agency said, “We believe that U.S. Steel’s leverage could stabilize around 2x-3x the next few years amid record profitability, but a higher rating hinges on bolstering cash resources during a phase of elevated capital expenditures. We calculate U.S. Steel’s last-12-months (LTM) debt to EBITDA as 3.1x, which is its first quarter below 10x since September 2019.” US Steel also received an upgrade to B3 by Moody’s in April and to B by Fitch in May.

US Steel’s 6.25% 2026s were up 0.33 to trade at 103.69 while its 6.65% 2037s were down 0.39 to trade at 109.25.
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