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POSCO said on the 15th that it had repaid $360 million (about 536.5 billion won) in foreign-currency bonds early through a tender offer.
POSCO explained that the early repayment was a measure to reduce borrowings and interest expenses and to strengthen financial soundness by stably managing its foreign-currency debt structure.
A bond tender offer refers to a company publicly buying back its issued corporate bonds before maturity to repay them early or adjust its debt structure. Conducted with all bondholders, it offers high transparency. It is an advanced liability-management (LM) technique used by leading global companies such as General Electric (GE), Micron and Broadcom, and POSCO is the first in Korea to carry it out.
The targeted bonds were 5.75% fixed-rate five-year dollar bonds issued in 2023, maturing in January 2028. The repayment was funded by cash on hand, with no new borrowing.
Of the total $1 billion issued, POSCO repaid $360 million, the amount tendered by bondholders. This will allow it to save $31 million (about 46.2 billion won) in interest expenses that would have accrued until maturity.
Regarding the purchase price, POSCO said an appropriate level of premium was offered through internal discussions with financial institutions. It also explained that the timing of repayment was the result of comprehensively considering factors such as the bonds' market price, interest rates at the time of issuance and now, and exchange rates. It added that the move strengthened a "natural hedge" that manages currency risk without using financial derivatives, and that the cash used was at a level that would not affect its future plans or liquidity.
POSCO plans to hold the remaining $640 million (about 954.1 billion won) in dollar bonds until maturity. A POSCO official said, "We will manage our foreign-currency debt more stably to strengthen our financial soundness."
