Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

US Steel was upgraded to Ba3 from B1 by Moody’s. The rating agency notes that US Steel’s operating results have materially strengthened in 2021, expecting an adjusted EBITDA of ~$6bn. This comes after a quicker than expected recovery in its key end markets, barring O&G, along with the addition of Big River Steel and a surge in steel prices, particularly HRC steel prices hitting a record high of ~$1,960/ton in November 2021 from a 4.5Y low $440/ton in July 2020. US Steel has used its strong free cash flows, proceeds from debt and equity issuances and asset sales to materially reduce its outstanding debt, significantly lower its interest costs and to push out its debt maturities. Moody’s further expects about $3bn in debt reduction in Q4 and thereby expects its leverage ratio (Debt/EBITDA) to be less than 1x and its interest coverage (EBIT/Interest) to be above 10x, considered strong for the Ba3 rating. US Steel is also expected to maintain very good liquidity, after it reported $2bn of unrestricted cash and borrowing availability of $1.746bn on its $1.75bn asset based revolving credit facility as of end-September.

US Steel’s dollar bonds were slightly lower with its 6.875% 2029s down 0.42 points to 105.52, yielding 5.66%

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