INVESTING

Bluescope Steel Bonds

By

This week Money asks FIIG where to invest and its pick is Bluescope Steel bonds.

Bluescope Steel bonds

Bluescope Steel Finance Limited has a USD denominated fixed rate bond maturing on May 1, 2018 with an excellent, high current yield to maturity of 6.00%pa.

bluescope-steel-bonds

With the Australian dollar currently trading at around US75 cents, investors in the bond will be well placed to capitalise from any future falls against the US dollar.

Bluescope recently released its half yearly results to the market, which caused a substantial rally in the value of the shares and the bonds. The company also provided strong 2H16 profit guidance.

BlueScope has a USD fixed rate bond maturing 1 May 2018 with an excellent, high current yield to maturity of 6.00% per annum.

The bonds are lower risk than Bluescope shares, pay income every six months and investors can expect the $100 face value of the bond returned to them at maturity.

Company description

Bluescope is an ASX listed steel manufacturer for the Australian, New Zealand and US market.

The company manufactures and distributes 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 $3.4bn.

Bluescope's product suite includes market leading multinational brands such as COLORBOND steel, ZINCALUME steel and Bluescope Zacs.

Its painted products such as COLORBOND provide a degree of protection against steel commodity price risk as 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.

Key financials 1H16

  • Revenue $4.441bn 
  • Underlying EBIT up 35% to $230m 
  • NPAT up 116% to $200m 
  • Gearing 21.7% 
  • Strong liquidity (undrawn debt plus cash) of $1.28bn

Investor information

  • Minimum investment per bond $USD10,000, with an upfront minimum of AUD equivalent $50,000 
  • No management or performance fees 
  • FIIG is a dealer and we take a small brokerage fee when we transact, this is already included in the yield to maturity returns shown below 
  • A custody service fee is also charged
  • Wholesale investors only

bluescope steel bonds

RELATED STORIES

TAGS
Post a comment
Link to something S7XazSE5