Posco becomes first Korean firm to retire foreign bonds via tender offer, saving $31m in interest

Posco has used its cash reserves to retire a portion of its foreign-currency bonds early — a move aimed at reducing interest costs and strengthening its financial health without taking on new debt.

Posco said Wednesday it had redeemed part of its foreign-currency bonds through a tender offer, marking the first time a South Korean company has repaid foreign bonds via this method.

The bonds targeted in the buyback are Posco's 5.75% fixed-rate, five-year dollar notes issued in 2023, which mature in January 2028. The company funded the repayment entirely from existing cash, with no new borrowing.

The early redemption totaled $360 million — 36 percent of the original $1 billion issuance — leaving a remaining bond balance of $640 million.

Posco estimates the move will save approximately $31 million in interest costs that would have accrued through maturity, cutting financing expenses by retiring high-rate bonds ahead of schedule.

A tender offer is a method by which a company publicly buys back its own bonds before they mature. Unlike a private negotiation with select investors, the process is open to all bondholders, making it more transparent.

The approach is a debt-management tool commonly used by global companies. General Electric, Micron and Broadcom are among the firms that have used bond tender offers to adjust their maturity profiles or cut interest costs.

Posco said it plans to use the early repayment to manage its foreign-currency debt structure more stably. With exchange rates, interest rates and global steel demand still presenting significant external risks, the company aims to reduce its borrowing burden and build financial resilience.

The move comes as Posco Group restructures its business portfolio around steel, resources and energy while divesting non-core operations. The early bond repayment is part of that broader effort to improve the group's financial condition. Posco Group has previously outlined plans to grow sales from 116 trillion won ($77.7 billion) in 2025 to 187 trillion won by 2035, reducing its reliance on steel while expanding its resources and energy businesses.

Posco said it will continue to manage its debt structure with an eye on market conditions and liquidity. The company plans to focus particularly on reviewing its foreign-currency debt ratio and maturity profile to lower financing costs and improve financial stability amid external uncertainty.

"This early repayment is a measure to reduce financing costs and manage our debt," a Posco official said. "We will continue to manage our foreign-currency liabilities more stably to strengthen our financial health."