First Case of a POSCO Group Affiliate Issuing Bonds After Receiving an Investment-Grade Rating from an International Credit Rating Agency
Reflects Positive Evaluation from Global Investors on Stable Profitability and Strategic Importance within the Group
$300 Million in 3-Year Bonds and $400 Million in 5-Year Bonds with an Interest Rate of 6.375%, Totaling $700 Million
POSCO’s Indonesian joint venture, PT Krakatau POSCO, successfully issued global bonds totaling $700 million on May 30. The dual-tranche bonds consist of $300 million with a 3-year maturity and $400 million with a 5-year maturity. This marks the first instance of a POSCO Group affiliate issuing global public bonds based on its own credit rating, independent of POSCO. The bonds have an interest rate of 6.375% for both maturities, and the funds raised will be used to repay existing debt.
* Dual-tranche: Issuing two bonds simultaneously with different maturities or interest terms.
PT Krakatau POSCO is an integrated steel mill jointly formed by POSCO and Indonesia’s state-owned steel company, Krakatau Steel, in 2010. It currently operates one blast furnace with a production capacity of 3 million tons, along with hot rolling and heavy plate mills. The successful bond issuance by a local steel company in Southeast Asia, a region with relatively high country risk, is attributed to stable performance and the strategic importance of the project in the group’s overseas operations.
PT Krakatau POSCO has reported operating profits for three consecutive years, making it the third most significant entity in the group following POSCO International. On May 17, the international credit rating agency Standard & Poor’s (S&P) said in a report, “PT Krakatau POSCO is expected to maintain a solid market position and stable profitability in Indonesia. Considering its substantial role and investment scale in the group’s overseas operations, it is deemed a strategically important subsidiary.” S&P assigned a BBB- (stable) credit rating to its unsecured U.S. dollar bonds.
These points were emphasized during global investor presentations for the bond issuance. PT Krakatau POSCO announced its intention to issue global bonds in the Asian market on May 17, and began investor recruitment. From May 20, investor presentations were held in Singapore, Hong Kong, and London. POSCO, the parent company, also participated in these presentations to support PT Krakatau POSCO.
Ultimately, the bond issuance attracted 191 global institutional investors, with orders amounting to approximately $4.9 billion, nearly seven times the final offering amount. As a result, 80% of the bonds were allocated to Asian investors, while European and Middle Eastern investors received 20%.