INVESTING

BlueScope Steel Finance

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This week Money asks fixed income experts FIIG securities where to invest and their pick is BlueScope Steel Finance.

Company description

BlueScope Steel Finance is a wholly owned finance subsidiary of ASX-listed BlueScope Steel. The company manufactures and distributes a range of steel products for the building, construction, manufacturing and automotive industries predominantly in Australia, New Zealand and the US. It is the third largest manufacturer of painted steel and coated steel globally and is a recognised quality leader in nine countries.

Bluescope steel

BlueScope is rated BB by S&P with a stable outlook and Ba3 by Moody's with a positive outlook. One of the key positives of this credit is the conservative balance sheet position of the company. BlueScope has seen strong improvements in its balance sheet and credit metrics over the past several years. The 2015 financial year gearing ratio of 5.5% and net debt/EBITDA ratio of 0.4x are both solid, backed by strong liquidity with $1.6 billion in cash and undrawn facilities.

Investor information

BlueScope Steel Finance has a US-dollar-denominated bond. It has less than three years until maturity on May 1, 2018. Expected yield to maturity as at September 28, 2015, is 6.45% a year.

  • Minimum investment per bond is $US10,000.
  • Among other risks, investors take on foreign currency risk - that is, the currency moves up or down and can provide unexpected changes in value and returns on the bond if sold before maturity.
  • 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 above.
  • A custody service fee is also charged.
  • The bond is only available to wholesale investors.
bluescope steel
Source: FIIG Securities

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