US Steel’s 6.65% 2037s were trading lower 0.25 points to 90.88 to yield 7.69%.
US Steel was upgraded to BB- to B+ by S&P due to the steelmaker’s ongoing deleveraging and liquidity preservation. The company reported an adjusted EBITDA of $1.4bn in 2Q 2022, up 50% YoY. S&P expects a moderation in 2H 2022 earnings with adjusted EBITDA for 2022 to be at $4-5bn, as prices fell to $1k/metric ton (mt) from highs of $1.5k/mt. The company repaid $1bn debt in 2021 and S&P projects its adjusted leverage to go below 1x for 2022. US Steel has been shoring up its liquidity as it undertakes a $3bn project of 3mn tons in mini-mill projects. The project regarding its mills will help it achieve its target to reduce its global GHG intensity by 20% by 2030 and strategically repositioning its electric arc furnaces (EAFs) from high carbon-emitting and coal-fired blast furnaces. These projects can add $650mn EBITDA if the mills become operational by 2026. US Steel also repurchased $800mn of shares in the last one year and announced an additional $500mn share buyback program. As of June, the company had cash balances of about $3bn. US Steel had received an upgrade by Fitch in June to BB from BB-.