Nippon Steel sells US$3.9 billion of bonds for US Steel loan
Half of them will mature in 2029 and the remainder in 2031, the company says
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[TOKYO] Nippon Steel said that it has raised 600 billion yen (S$4.9 billion) from an upsized sale of convertible bonds – the biggest Japanese offering of its kind – to help repay the loans it had taken out for its acquisition of US Steel.
Japan’s largest steelmaker sold debt mainly in Europe and Asia, it said in a filing with the nation’s finance ministry, but did not offer any in the US.
Half of the bonds, which can be converted into stock, are set to mature in 2029 and the remainder in 2031, as stated in the filing.
Nippon Steel shares slumped by as much as 6 per cent on Wednesday (Feb 25).
It earlier sought to raise 550 billion yen from the zero-coupon bonds. They carry a conversion premium of 10 per cent above Tuesday’s closing price for the 2029 tranche – 11 per cent for the 2031 tranche.
Investors expressed enough interest to buy all the bonds on offer, sources said, shortly after the company started taking investor orders.
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Japanese companies have been increasingly turning toward convertible bonds to raise funds, as the prospects of a surge in fiscal spending – and central bank rate hikes – increase the cost of traditional debt instruments.
Convertible bonds have been on the upswing around the globe. Asian companies raised US$9.3 billion last month, the best January since 2018.
Nippon Steel’s bridging loan of about two trillion yen – secured to fund the company’s acquisition of US Steel – is approaching maturity in June 2026.
It finalised the takeover in 2025 after 18 months of negotiations that became entangled in American politics, and has plans to build a major new steel plant in the US.
The outstanding balance on the bridging loan has been reduced to around 1.3 trillion yen, chief financial officer Takahiko Iwai said on Feb 18.
Repayments were made using the funds it had raised from yen-denominated hybrid loans and other instruments.
From March 2025 to December the same year, the company’s total interest-bearing debt doubled to 5.3 trillion yen.
Nomura Holdings, Goldman Sachs Group and Bank of America are arranging the deal, the terms show. BLOOMBERG
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