We have added the BlueScope Steel Finance Limited 7.125% senior unsecured bond maturing on 1 May 2018 to the DirectBonds list. The bond is available to wholesale investors only with a minimum face value of USD10,000
The bond issuer is a wholly-owned finance subsidiary BlueScope Steel Limited (‘BlueScope’). BlueScope is an ASX-listed steel manufacturer for the Australian, New Zealand and US market. It is a leading international supplier of steel products and solutions. The company manufacture and distribute a range of steel products for the building, construction, manufacturing and automotive industries. As the third largest manufacturer of painted steel and coated steel globally it is a recognised quality leader in nine countries. BlueScope currently has a market capitalisation of about $2.3bn.
BlueScope’s product suite includes market leading multinational brands such as COLORBOND steel, ZINCALUME steel and BlueScope Zacs as well as local brands (Prima steel, Durashine). Its exposure to ‘commodity risk’ is to some extent in the prices it achieves on its steel products, but more so in the underlying costs of production (iron ore and metallurgical coal). Its painted products such as COLORBOND provide a degree of protection against steel commodity price risk as we understand that product prices are not impacted by steel price volatility. Profit margins on the Australian steel business have actually improved in recent years as the underlying cost of raw materials has fallen while domestic product prices have held up.
BlueScope is rated BB by S&P with a stable outlook, and Ba3 by Moody’s with a positive outlook. One of the key positives of this credit is the conservative balance sheet position of the company. BlueScope has seen strong improvements in its balance sheet and credit metrics over the last several years. The FY15 gearing ratio of 5.5% and net debt / EBITDA ratio of 0.4x are both very solid, backed by strong liquidity with $1.6bn in cash and undrawn facilities.
Currently offering an indicative yield to maturity of 6.46%*, BlueScope offers investors high yielding exposure to a quality Australian business. View the BlueScope Steel Finance factsheet.