BHP Billiton Ltd. is seeking a $6 billion credit line to refinance an existing facility as banks offer investment-grade companies the lowest borrowing costs in more than five years.
The world’s biggest mining company hired Deutsche Bank AG and Royal Bank of Scotland Group Plc to arrange the five year revolving credit facility, according to a statement. BHP is offering to pay an initial interest margin of 20 basis points, or 0.2 percentage points, more than benchmark rates on the loan, people familiar with the terms said today.
BHP joins RWE AG and GDF Suez SA in seeking to replace loans, taking advantage of banks offering cheap rates in order to cement relationships with Europe’s biggest borrowers. Investment-grade companies in the region paid an average margin of 73 basis points on credit lines arranged last year, the lowest since 2007, according to data compiled by Bloomberg.
BHP spokeswoman Jennifer White declined to comment on the terms of the financing. The company is based in Melbourne and is listed in London and Australia.
The new debt, which includes two one-year extension options, will replace a $5 billion loan obtained in 2010, according to the statement. Deutsche Bank and RBS started marketing the deal to other lenders today. The credit line will be used to back up BHP’s commercial paper programs and for general corporate purposes.
RWE, Germany’s largest power generator, is seeking to replace a 4 billion-euro ($5.5 billion) loan with a facility paying an interest margin of 30 basis points, people familiar with the deal said earlier. GDF Suez, France’s largest natural-gas supplier, last week started syndicating a 5 billion-euro credit line with a 20 basis-point margin, according to data compiled by Bloomberg.