BHP Sells First Aussie Dollar Bonds in More Than a Decade
BHP Billiton Ltd. (BHP), the world’s biggest mining company, sold A$1 billion ($1.02 billion) of bonds in its first offering of debt in Australian dollars in more than a decade.
The miner priced the five-year securities to yield 90 basis points more than the swap rate, according to an e-mailed statement from Commonwealth Bank of Australia (CBA), which managed the sale with Australia & New Zealand Banking Group Ltd. (ANZ) The line of notes is the largest ever sold in Australia by a company outside the financial industry, data compiled by Bloomberg show.
The nation’s biggest borrowers have traditionally headed to deeper markets offshore for most of their bond funding, with non-financial corporate issuance making up less than 15 percent of sales in Australia this year. While BHP has $28.9 billion of outstanding bonds in U.S. dollars, euros and pounds, today’s offering was its first in the Australian currency since 2001, according to data compiled by Bloomberg.
“BHP is a strong, highly-rated company with good cash flows,” said Mark Mitchell, a Sydney-based portfolio manager at Kapstream Capital, which oversees A$4.9 billion. “Local investors like the name and are starved for non-financial issuers.”
The Melbourne-based miner has an A+ credit rating from Standard & Poor’s and Fitch Ratings, the fifth-highest grade, and the equivalent A1 from Moody’s Investors Service.
Antonios Papaspiropoulos, a Melbourne-based spokesman for BHP, declined to comment when contacted by phone today before the bond sale priced.
BHP, the world’s third-biggest shipper of iron ore and biggest shipper of coking coal, owns mines, smelters, ports and railroads in Australia, where 52 percent of its long-term assets and 42 percent of its employees are located, according to data compiled by Bloomberg.
While the company’s Aug. 22 earnings report shows it approved spending $7.3 billion on new iron ore operations, BHP has also shelved a number of projects because of rising costs and lower prices as China, the biggest metals consumer, shifts its focus from infrastructure to consumer spending.
The miner in August announced it would delay building an iron ore port expansion at Port Hedland, estimated to cost $22 billion. Chief Executive Officer Marius Kloppers said the company was spending about $1 billion a month on its iron mines in Australia, in a teleconference on Sept. 20.
BHP priced the equivalent of $5.4 billion of notes denominated in euros and British pounds on Sept. 19 in its biggest-ever sale, driving offerings abroad by Australian issuers to a record $18.8 billion last month, data compiled by Bloomberg show.
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