By Brazil Stock Guide – Companhia Siderúrgica Nacional (CSNA3; NYSE: SID) has launched a transaction to extend part of its international debt after failing, so far, to complete the asset sales it had presented at the beginning of the year as the main pillar of its deleveraging strategy.
The board approved an exchange offer through subsidiary CSN Inova Ventures. The company plans to replace notes due in 2028 carrying a 6.75% annual coupon with new securities due in 2030 paying 11%, while also distributing up to US$ 330 million in cash to participating bondholders. The principal amount of the new notes may reach US$ 970 million.
The transaction comes as CSN’s capital structure has deteriorated again. Preliminary figures indicate that adjusted net debt may have reached R$ 44 billion in June, up from R$ 40.5 billion in March. Leverage also increased, although the company estimates that net debt to EBITDA remained below 3.5 times.
Asset Sales Have Yet to Deliver Deleveraging
In January, CSN announced a broad divestment program aimed at reducing debt by between R$ 15 billion and R$ 18 billion. The plan included the sale of control of CSN Cimentos and a significant stake in a new holding company that would combine logistics assets, including railways, ports and road transportation operations.
The company received non-binding proposals for the cement business and said in May that it expected to complete a sale during the third quarter. The process, however, has yet to produce an announced transaction. The absence of those proceeds helps explain why CSN is again turning to the debt market to strengthen liquidity and push maturities further into the future.
The difference in funding costs is substantial. CSN is proposing to replace debt issued at 6.75% with securities paying 11% annually. The coupon could fall to 10.5% if the company reduces the principal amount of the new notes by at least US$ 200 million before February 2028.
Even with that potential reduction, the transaction highlights the high price investors are demanding to finance a heavily indebted group whose deleveraging plan has yet to deliver tangible results.
For every US$ 1,000 in existing notes tendered, investors will receive US$ 746.15 in new securities and US$ 253.85 in cash, in addition to accrued interest. The offer requires participation from holders representing at least 70% of the outstanding issue, equivalent to US$ 910 million, and is expected to settle on Aug. 12.
Loss Widens Despite Stable EBITDA
The preliminary figures released alongside the offer show that operating performance was not enough to offset the pressure from CSN’s financial structure.
The company expects adjusted EBITDA of between R$ 5.3 billion and R$ 5.4 billion in the first half, slightly above the R$ 5.2 billion reported in the same period of 2025. Net revenue is expected to remain broadly stable.
The net loss, however, is expected to widen to between R$ 1.3 billion and R$ 1.4 billion, compared with a loss of R$ 861.9 million a year earlier. Gross debt may have reached R$ 54 billion, up from R$ 50.4 billion at the end of the first quarter.
Why It Matters
The exchange offer reduces CSN’s refinancing risk in 2028, but it does not address the underlying problem. The company is gaining another two years to repay part of its debt, while accepting a considerably higher interest rate and continuing to wait for proceeds from the asset sales it promised.
For investors, the central question is no longer limited to the company’s operating performance. It is whether management at the group controlled by businessman Benjamin Steinbruch can turn the divestment program into actual cash before higher interest costs and rising debt consume an even larger share of cash generation.
Without the sale of CSN Cimentos or stakes in its infrastructure assets, the bond exchange is primarily a bridge. It buys time, but it also makes the wait for deleveraging considerably more expensive.
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