Rio Tinto Finance (USA) plc, a subsidiary of
Rio Tinto plc
), announced the pricing of $3.0 billion fixed and floating rate
bonds. Each of the bond categories comprises two tranches of
notes. However, Rio Tinto has not revealed the purpose for which
the proceeds shall be used.
The fixed rate bonds consists of 3-year fixed rate notes at
1.375% for $1.0 billion, maturing on Jun 17, 2016 as well as
5.5-year fixed rate notes at 2.250% for $1.25 billion, maturing
on Dec 14, 2018.
The floating rate bonds consist of 2-year floating rate notes,
paying a coupon of 3-month US$ LIBOR added with 55 basis points,
which are due to mature on Jun 19, 2015. Apart from this, the
floating rate bonds include 3-year floating rate bonds, paying a
coupon of 3-month US$ LIBOR added with 84 basis points, maturing
on Jun 17, 2016.
Although not directly issued by Rio Tinto, these bonds will be
guaranteed by Rio Tinto plc and Rio Tinto Limited.
As on Dec 31, 2013, Rio Tinto had $7.1 billion in cash and
cash equivalents and $24.6 billion of borrowings and other
financial liabilities. Rio Tinto had $1.0 billion interest
payments pending as on Dec 31, 2012, which will likely increase
with the issue of these bonds.
Rio Tinto Finance (USA) plc made a similar kind of issue in
Aug 2012. However, the issue was restricted to fixed rate
bonds,with an average maturity of 12.9 years and an average
coupon rate of 2.67%, valued at $3.0 billion. The total offer
comprised 5-year debt securities at 1.625% for $1.25 billion,
maturing on Aug 21, 2017, 10-year securities at 2.875% for $1.0
billion maturing on Aug 21, 2022 and 30-year securities at 4.125%
for $750 million maturing on Aug 21, 2042.
Rio Tinto currently carries a Zacks Rank #4 (Sell). Not all
stocks in the mining industry are performing as badly as Rio
Tinto. Companies like
Golden Minerals Co
Hi-Crush Partners LP
Alliance Resource Partners LP
), each carrying a Zacks Rank #2 (Buy), appear impressive and are
ALLIANCE RES (ARLP): Free Stock Analysis
GOLDEN MINERALS (AUMN): Free Stock Analysis
HI-CRUSH PTNRS (HCLP): Free Stock Analysis
RIO TINTO-ADR (RIO): Free Stock Analysis
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