Nippon Steel Seeks 600 Billion Yen in Upsized Convertible Bond Sale

Khac Phu Nguyen

Wed, February 25, 2026 at 4:57 AM GMT+9 2 min read

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This article first appeared on GuruFocus.

Nippon Steel (NPSCY) is leaning into the convertible market in a move that signals both urgency and discipline as it reshapes its balance sheet after the United States Steel Corp. acquisition. The company is now targeting 600 billion yen, or roughly $3.8 billion, from an upsized zero-coupon convertible bond offering, above its earlier 550 billion yen plan. The securities will be sold primarily in Europe and Asia, with no allocation in the US, and split evenly between 2029 and 2031 maturities. Conversion premiums are set at 10% above Tuesday’s closing price for the 2029 tranche and 11% for the 2031 notes, a structure that could limit near-term dilution while still giving investors equity upside.

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The capital raise comes against the backdrop of a roughly 2 trillion yen bridging loan arranged to finance the US Steel takeover, which was finalized last year after 18 months of negotiations that became entangled in American politics. That bridge facility is due to mature in June, and the outstanding balance has already been reduced to about 1.3 trillion yen, according to Chief Financial Officer Takahiko Iwai, with repayments funded through yen-denominated hybrid loans and other instruments. Even after those steps, total interest-bearing debt stood at 5.3 trillion yen in December 2025, about double the level recorded in March the same year, underscoring how significantly the acquisition expanded the company’s leverage profile.

Early demand appears to have been solid. People familiar with the matter indicated that orders were sufficient to cover the full offering shortly after books opened, suggesting institutional appetite for the structure. The deal is being arranged by Nomura Holdings Inc., Goldman Sachs Group Inc. and Bank of America Corp. The timing also aligns with a broader shift across Japan and Asia, where companies are increasingly tapping convertibles as expectations for higher fiscal spending and potential central bank rate hikes raise the cost of traditional debt. Asian issuers raised $9.3 billion through convertible bonds last month, marking the strongest January since 2018, a backdrop that could make Nippon Steel’s strategy look less like an outlier and more like part of a regional funding recalibration.

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