Rio Tinto Plans to Buy Back $1.5 Billion in Debt -Update
April 21 2016 - 01:15PM
Dow Jones News
By Alex MacDonald
LONDON--Mining giant Rio Tinto PLC(RIO.LN) said Thursday it has
launched cash tenders to buy back up to $1.5 billion of debt due in
2017 and 2018, joining other mining and metals companies in using
their cash piles to pare debt amid a protracted commodities price
downturn.
The tenders are expected to close in May depending on whether
certain conditions are met.
Rio Tinto, the world's second largest diversified miner by
market value, said it will first offer to buy up $1.5 billion of
the $1.75 billion notes due in 2017.
If it fails to spend all of the allotted $1.5 billion on those
notes, it will use whatever money is left over to buy the 2018
notes, which have a total value of $3 billion.
Other mining and metals companies have also tried to buy back
their debt, with mixed results. Last month Anglo American, the
world's fifth-largest diversified miner, used $1.7 billion to
retire $1.8 billion in obligations related to U.S. and euro
bonds.
This week, ArcelorMittal (MT), the world's largest steelmaker,
reported that it only been able to spend $1.1 billion of the $3.2
billion it had set aside to buy notes maturing in 2017 and
2018.
Analysts at Kepler Cheuvreux credit research said in a note
Tuseday that the low turnout signalled investors' preference to
hold on to their relatively higher -yielding ArcelorMittal bonds
given the general lack of yield in the euro corporate bond
market.
Rio Tinto's 2017 note tranches of $500 million and $1.25 billion
have annual coupons of 2% and 1.625% respectively while the 2018
notes of $1.75 billion and $1.25 billion have coupons of 6.5% and
2.25% respectively.
-Tasos Vossos in London contributed to this story
-Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
April 21, 2016 13:00 ET (17:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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