Bonds of Barrick Gold Corp. (ABX) rose after the the world’s largest gold miner said it would raise at least $3 billion to repay a portion of its $15 billion in debt.
The company’s $750 million of 5.25 percent notes due 2042 increased 6.6 cents on the dollar to 87.49 cents at 8:38 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds yield 6.19 percent, down from 6.78 percent yesterday, before the Toronto-based miner announced plans for Canada’s biggest equity issue since 2009.
Barrick, which is contending with a plunge in gold prices this year, also plans to suspend construction at its Pascua-Lama project, an $8.5 billion mine on the Argentina-Chile border.
The stock offering, which may generate as much as $3.45 billion if an over-allotment option is exercised, highlights “the extreme measures management is taking to strengthen its balance sheet in a difficult operating environment,” Wen Li, an analyst at CreditSights Inc. in New York, wrote yesterday in a report. “Management is prudent in suspending the project to reduce its near-term capital outlay and support its liquidity position.”
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