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

United States Steel Corporation has been upgraded to B3 from Caa1 by Moody’s based on improved financials and completion of integration with Big River Steel under the “Best of Both” strategy. The rating agency has also upgraded its senior unsecured debt rating to Caa1 from Caa2 and Big River Steel’s secured debt rating to B1 from B3. The outlook for US. Steel’s and Big River Steel has also been revised to positive from stable indicating a possible upgrade in the future. The rating agency forecasts the results of the steel giant to materially strengthen in 2021 and expects the adjusted EBITDA to rise to $2bn due to a faster than anticipated recovery in its key end markets. The rating action reflects the favourable outlook of the steel sector due to the recent surge in the steel prices and the strong position held by the Pennsylvania based company in the flat-rolled steel segment. US Steel has also successfully pared down its debt in 2021 by using the proceeds from secondary stock offering worth $790mn and issuance of 6.875% 2029 senior notes worth $750mn to redeem its $1.056bn 12% senior secured notes due 2025. The proceeds also helped it pay back ~$800mn in debt thereby reducing its leverage and borrowing costs. An EBITDA of ~$2bn could help lower its leverage ratio to ~3.0x and raise its interest coverage ratio to 4.0x justifying the rating action. The two notch  upgrade of Big River Steel’s secured debt has been based on the strong position held by the company in the sector as well as the redemption of the secured notes by US Steel. Michael Corelli, Moody’s Senior Vice President and lead analyst for U. S. Steel said that “The upgrade of U. S. Steel’s ratings reflects the materially improved steel sector fundamentals along with its recent debt and interest expense reduction initiatives,”

US Steel’s 6.65% 2037s were up 1.06 to trade at 99.56 while its 6.25% 2026s were down 0.25 to trade at 101.5.
Show Buttons
Hide Buttons