On July 7, the day of the London terrorist attacks, only one company was brave enough to try to price a bond issue after the bombs went off. But the decision by Brazil's Companhia Siderurgica Nacional to go ahead with its perpetual bond turned out to be sound. After amassing $2.3 billion in orders, the bond was upsized to $500 million from $150 million (it was later re-opened for a further $250 million).
The bond raised extremely cheap money for steel company CSN. A typical vanilla 30-year bond for the company could be expected to price with a coupon of about 9.625%. But this was no bullet 30-year bond. It's a perpetual, which should increase the coupon further, to the 10% range. On top of that, CSN can call the bond at par after five years and every quarter thereafter – an option that, depending on the volatilities you...
