BHP Billiton’s $5.25 Billion Bond Offer Leads New-Issue Revival

BHP Billiton Ltd. Headquarters
BHP, based in Melbourne, plans to use proceeds from thesale to repay existing obligations and for general corporate purposes. Photographer: Carla Gottgens/Bloomberg

BHP Billiton Ltd., the world’s biggest mining company, sold $5.25 billion of bonds in the U.S. as the corporate new-issue market rebounds from a two-week slump.

BHP raised the third-biggest amount this year in a five-part offering of varying maturities yesterday. The miner’s $1 billion of 30-year notes were priced to yield 102 basis points, or 1.02 percentage points, more than similar-maturity Treasuries, according to data compiled by Bloomberg. Only SABMiller Plc and Petroleo Brasileiro SA, which issued $7 billion of bonds each, have sold a greater amount of debt on a single day in 2012, data compiled by Bloomberg show.

Borrowers raised the most debt in the U.S. yesterday since Feb. 8 when $11.9 billion of bonds were sold, Bloomberg data show. Global bond sales began this month with a record start before issuance tapered off. Corporate borrowers had sold more than $158 billion of bonds through Feb. 9 and only $92.1 billion after that through Feb. 20, the data show.

BHP, based in Melbourne, plans to use proceeds from the sale to repay existing obligations and for general corporate purposes. The miner is spending $80 billion over the next five years to boost output of iron ore, copper and coal.

Credit-default swaps on BHP tumbled 10.2 basis points yesterday to 74.4, the lowest level since August, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

Spreads Narrow

The relative yield on investment-grade corporate debt in the U.S. has fallen to 212 basis points from 244 on Nov. 16 when BHP last issued a dollar-denominated bond, according to Bank of America Merrill Lynch indexes. Foreign issuers in the U.S. have already raised more than $170 billion, the most at the start of the year since records have been kept, Bloomberg data show.

BHP’s offering included a $1 billion, two-year floating-rate note that priced at 27 basis points more than the three-month London interbank offered rate; a $1 billion three-year security at 62 basis points more than Treasuries; a $1.25 billion five-year tranche that priced at 77 basis points over Treasuries; as well as a $1 billion 10-year portion that priced at 92 basis points more than comparable Treasuries.

The sale was managed by Barclays Plc and JPMorgan Chase & Co. BHP has more than $2 billion of bonds maturing this year, Bloomberg data show. The mining company is rated A1 by Moody’s Investors Service and A+ by Standard & Poor’s.

American Honda Motor Co.’s finance unit also sold $1.75 billion in a two-part U.S. dollar offering yesterday and Cargill Inc., a privately-held producer and marketer of food and agricultural products and services, raised $1 billion of debt.

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