BHP Raises $3 Billion Through US Bond Issue

BHP, the world's largest mining company, has successfully raised $3 billion through a US bond issue, demonstrating its strong financial position and ability to secure favorable financing terms. The bond issuance aligns with BHP's long-term financial strategy of diversifying funding sources and maintaining a strong balance sheet.

The bond issuance consists of five tranches, ranging from three to 30 years, with interest rates (coupons) of over 5%, extending out to 30 years. The least expensive is the 5.1% rate on $700 million of five-year bonds, while the most costly is the 5.5% rate on $800 million of bonds maturing in 2053. The largest tranche is $1.5 billion in 10-year bonds with a rate of 5.25% (the same rate as the $850 million in three-year bonds).

BHP's interest rates on this issue align with the current Fed federal funds range of 5.25% to 5.50%, indicating that, in terms of credit, Australia's largest company enjoys the same standing with investors as the world's largest economy. This suggests that the bond issuance may have helped lower the company's cost of capital.

The proceeds from the bond issuance will be used to repay the acquisition facility used for the $A9.8 billion enterprise value acquisition of OZ Minerals and for general corporate purposes. This issuance will add more than $US200 million to BHP's annual interest expenses, with approximately 30% potentially eligible for a tax deduction.

BHP's bond issuance supports the company's organic growth and expansion plans by funding strategic acquisitions, providing flexibility for general corporate purposes, diversifying funding sources, and aligning with favorable market conditions. The issuance is expected to have a positive impact on BHP's debt profile and cost of capital, given the lower interest rates and potential tax benefits.



In conclusion, BHP's recent bond issuance demonstrates the company's strong financial position and ability to secure favorable financing terms. The issuance aligns with BHP's long-term financial strategy and is expected to have a positive impact on the company's debt profile and cost of capital. The bond issuance supports BHP's organic growth and expansion plans by funding strategic acquisitions, providing flexibility for general corporate purposes, diversifying funding sources, and aligning with favorable market conditions.