AngloGold Ashanti Ltd. (ANG) offered investors $1.25 billion of bonds at the highest rate of any of the third-biggest producer of the metal’s debt.
It will use the net proceeds of about $1.2 billion on the notes that will yield 8.5 percent at par to repay other debt and for general corporate purposes, the Johannesburg-based company said today in a statement. The offer closes on July 30, it said. AngloGold also started an offer to buy back all of the $732.5 million of bonds due in May 2014 that can be converted into stock.
The company is selling the debt after having its rating cut to the highest junk level by Standard & Poor’s on July 17 and to the lowest investment grade at Moody’s Investors Service five days earlier. AngloGold plans to write down the value of its assets and stockpiles by as much as $2.6 billion after the price of gold plunged. Gold has slipped 21 percent this year, including a record three-month drop in the second quarter.
“It is easier to buy it out right now,” David Davis, an analyst at SBG Securities Ltd. in Johannesburg, said of the convertible debt by phone. “It will be more expensive later.”
The company will pay $1,015 for each $1,000 of principal on the convertible bonds, together with accrued and unpaid interest. The offer expires on Aug. 21.
Yields on AngloGold’s dollar debt due in April 2020 surged to a record 7.83 percent on July 25 and were trading at 7.70 percent by 11:18 a.m. in Johannesburg.
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