TOKYO - Nippon Steel is poised to raise 550 billion yen, approximately $3.55 billion, through a convertible bond sale, marking the largest corporate bond offering in Japan's history. The move is intended to refinance the company's $15 billion acquisition of U.S. Steel, which concluded in June, and to finance future business expansion.
The bond issuance is structured in two equal tranches, each valued at 275 billion yen, with maturities set for 2029 and 2031. These bonds will feature stock acquisition rights and a zero coupon structure.
Nippon Steel indicated the offering size could be expanded based on investor interest and market conditions. The company plans to invest 6 trillion yen over the next five years, with $11 billion earmarked for U.S. Steel, to drive business growth.
Analysts note that by opting for convertible bonds, Nippon Steel aims to mitigate immediate shareholder dilution. This funding strategy is seen as a pivotal step for the company, enabling a focus on international growth while maintaining financial prudence.
This issuance follows a recent widening of Nippon Steel's net loss forecast for the fiscal year ending March, attributed partly to operational disruptions and acquisition-related charges.