14th Oct 2015 08:39
LONDON (Alliance News) - BHP Billiton PLC is planning on selling around USD3.0 billion of hybrid bonds as recent gains over the past week in commodity-related asset prices boosted demand for BHP debt, The Wall Street Journal reported on Wednesday.
Citing "a person familiar with the deal" and a deal notice, the WSJ said in addition to the dollar bonds, BHP plans to sell corporate hybrid bonds denominated in euros and sterling, but details of those plans are unknown.
Hybrid bonds are a relatively more-risky form of corporate debt that combine aspects of both debt and equity. Interest payments can be deferred, and the bonds are junior to all other forms of debt in the event of a default. Companies issue the debt because it allows them to raise capital without diluting existing shareholders.
Investors are being offered a yield of around 7% on a 60-year dollar bond that can be retired after 10 years, according to a person familiar with the deal cited by the newspaer. The pricing of that bond, scheduled for Wednesday, will be used as a reference point to price a second 60-year dollar bond that can be retired after five years, the WSJ reported.
http://www.wsj.com/articles/bhp-billiton-to-sell-about-3-billion-in-bonds-1444774922
BHP Billiton said in a statement filed with Australian Securities Exchange last month that it would begin marketing on September 28 a multi-currency hybrid corporate bond that it expected to be treated as half debt, half equity by ratings companies. BHP Billiton is rated A1 by Moody's Investors Services and A+ by Standard and Poor's.
In a statement Wednesday, BHP outlined how its marketing division is "uniquely positioned" to create value for shareholders by building on BHP Billiton's scale, diversification and high quality products. Marketing refers to commodities trading activities.
BHP President of Marketing Arnoud Balhuizen said the marketing division connects the company's resources to market, using its technical and commercial expertise to "ensure products are placed with the right customers for the best price."
He also highlighted the marketing division maximises returns on infrastructure investments and improves efficiency across the company. The division is also responsible for providing "deep economic and commodity market insight" to guide the company's strategic investment decisions.
BHP shares were down 0.4% to 1,157.0 pence per share in London on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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