Corus scraps £278m bond issue

Corus, the Anglo-Dutch steel maker, yesterday abandoned plans to sell €500m (£278m) of bonds because of the deterioration in debt market conditions.

Corus, the Anglo-Dutch steel maker, yesterday abandoned plans to sell €500m (£278m) of bonds because of the deterioration in debt market conditions.

Corus was seeking to refinance some of the £898m of debt which it will have to pay back between 2006 and 2008. Credit Suisse First Boston was managing the sale for Corus, which is rated junk by Standard & Poor's and by Moody's.

The company said "Conditions in the debt markets have deteriorated materially in response to global events outside the control of the company."

It added: "The company will continue to review its options in respect of the refinancing of the existing bonds maturing in the period 2006-2008."

Corus is just one of a number of companies which are scrapping sales of high-risk, high-yield debt. The move has been prompted by expected rises in interest rates in the UK and US, which have pushed up the price of issuing bonds.

Debt issuance has slowed as the yield on the 10-year US Treasury note, a benchmark for corporate borrowing rates, has risen to its highest since July 2002.

Corus last month reported an end to a four-year run of losses in the first financial quarter, earning an operating profit after raising prices to offset higher raw-material costs. It plans to boost steel prices by as much as 20 per cent in July, its third increase this year. Its total debt fell to £1bn at the end of 2003, from £1.24bn a year earlier.