Newly Issued Bond: POSCO International USD Bond; IPG: 5.36%

POSCO International’s 5-year USD bond offers reasonable yield, but investors should monitor higher leverage and tight near-term liquidity

iFAST Research Team
iFAST Research Team23 Jun 2026 17 Views
Newly Issued Bond: POSCO International USD Bond; IPG: 5.36%
  • Korea’s POSCO International Corp. (“POSCO International”) plans to issue a 5-year senior unsecured USD bond, with initial price guidance of around 5.36% — equivalent to the 5-year U.S. Treasury yield plus 120 basis points. The issuer is currently rated BBB by S&P, which is investment grade, and the bond is expected to receive the same BBB rating from S&P. Proceeds from the bond issuance will be used for general corporate purposes.
  • POSCO International is a major Korean general trading company and a core member of the POSCO Group. It is currently around 70.7%-owned by the group holding company, POSCO Holdings. The company was formerly Daewoo Corporation, which was established in 1967 and acquired by POSCO in 2010. It is currently listed on the Korea Exchange under the ticker 047050.KS, with a market capitalization of around KRW8.9 trillion. Its businesses span three major segments: energy, trading and materials. The company also has an overseas network of more than 80 branches.
  • Operationally, POSCO International recorded revenue of KRW8.4 trillion in 1Q2026, for the quarter ended March 2026, up 3.1% year-on-year. Operating profit rose 32.3% year-on-year to around KRW358 billion, while the operating margin improved to 4.3%, compared with 3.3% in 1Q2025.
  • By segment, operating profit from the energy segment increased 28% year-on-year to around KRW173 billion. This was mainly supported by continued production growth at SENEX, the company’s Australian power subsidiary, as well as higher utilization in the power generation business. Operating profit from the materials segment also rose 36% year-on-year to around KRW184 billion, mainly driven by the newly consolidated PT.PAR palm business and stable contributions from steel trading. Compared with the company’s flat performance in FY2025, when total revenue was KRW32.4 trillion, growth in 1Q2026 was relatively solid.
  • From a credit perspective, as of March 2026, the company’s total debt increased 25% year-on-year to KRW6.9 trillion. Its net gearing ratio therefore rose from 59% at end-2025 to 75.1%, indicating a clear increase in leverage. This was mainly due to higher debt from investment expansion related to SENEX, PT.PAR and drilling activities at the Myanmar gas field.
  • The company also has KRW3.4 trillion of debt maturing within one year, including KRW2.2 trillion of trade financing. Compared with the company’s current cash reserves of only KRW1.1 trillion, liquidity appears relatively tight. However, the company’s cash generation has improved, with EBITDA rising 23.5% year-on-year to KRW501 billion in 1Q2026. Together with support from its parent, POSCO Holdings, overall debt-servicing capacity should remain manageable.
  • The new 5-year bond has initial price guidance of around 5.36%. Considering the company’s trading position, solid growth momentum and support from its parent, the new bond yield appears to offer reasonable compensation for the risk of its elevated debt level. It may be suitable for investors seeking stable income and willing to accept a certain level of risk. However, investors should note that the final issue yield may not be as high as the initial price guidance.

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