[miningmx.com] – THE high coupon rate of the $6.5bn BHP Billiton is currently raising through a hybrid bond – in the face of investor scepticism – suggests the Melbourne-headquartered firm has specific merger and acquisition targets.
“The willingness to print at such high coupons indicates to me that they already have their eyes on something,” an unnamed investor told Reuters. “They’re probably the only company in the sector, apart from maybe Rio Tinto, that can afford to buy right now.”
The multi-currency bond – with euro, sterling and dollar tranches – showed investors are still willing to add risk in the battered metals and mining sector at the right price.
“BHP is a strong credit but it operates in a weak sector,” said Eve Tournier, head of pan-European credit at Pimco told the newswire.
“There were some concerns that it wouldn’t be able to issue hybrids in the current environment.”
But by adding a “commodity premium,” active bookrunners Barclays, Bank of America Merrill Lynch, BNP Paribas and Goldman Sachs were able to amass more than US$13bn in orders worldwide.
“They have had to increase the coupon by about 50 basis points to 100bp,” Tournier said.
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