Nov. 7 (Bloomberg) -- Fortescue Metals Group Ltd., Australia’s third-biggest iron ore exporter, lowered the rate on a $4.95 billion loan it’s seeking to refinance debt, according to a person with knowledge of the transaction.
The company will pay interest at 3.25 percentage points more than the London interbank offered rate, with a 1 percent floor on the lending benchmark, compared with 3.75 percentage points originally proposed, said the person, who asked not to be identified because terms aren’t set.
Fortescue is refinancing a $5 billion credit pact to cut interest payments as iron ore prices are forecast to drop. Standard & Poor’s yesterday increased the miner’s credit rating to BB, or two levels below investment-grade, citing a continued increase in production scale and cost reduction. S&P said its outlook is “positive.”
The company’s existing loan was obtained last year and has an interest rate of 4.25 percentage points more than Libor with a 1 percent floor on the lending benchmark, according to data compiled by Bloomberg.
The new financing, being arranged by Credit Suisse Group AG, is covenant-light, meaning it won’t have financial maintenance requirements that help protect investors. Lenders must submit their commitments to participate in the deal by 5 p.m. today, the person said.
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