BHP Raises $3 Billion Through Bond Issuance in US

BHP Group Limited (BHP), the world's largest mining company, has successfully raised $3 billion through a bond issuance in the US market. The company announced on Wednesday that it had priced $3 billion of senior unsecured bonds in the American market, with the funds intended to be used for the repayment of the acquisition facility used for the acquisition of OZ Minerals Ltd and for general corporate purposes.

The bond offer comprised five tranches, ranging from three years to 30 years, all carrying interest rates (coupons) of over 5%, extending out to 30 years. The least expensive was the 5.1% rate on $700 million of five-year bonds, while the most costly was the 5.5% rate on $800 million of bonds maturing in 2053. The largest tranche was $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. The company intends to utilize the proceeds from the bonds, along with available cash, 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.

The settlement for these bonds is scheduled for tomorrow (September 8).

BHP's bond issuance is a significant step in the company's long-term growth strategy, providing it with the capital necessary to fund various projects and acquisitions that will support its continued success in the global mining industry. The funds raised through the bond issuance could be used to support BHP's expansion into potash, copper production, and other strategic initiatives. Additionally, the long-term nature of the bonds will provide BHP with a stable source of funding for its operations and growth initiatives.

In conclusion, BHP's bond issuance is a testament to the company's strong creditworthiness and investor confidence, even in a challenging interest rate environment. The diverse range of tenors and fixed coupons also demonstrates BHP's ability to cater to various investor preferences and market conditions. The proceeds from this bond issuance will have both short-term and long-term impacts on BHP's financial leverage, debt service obligations, and overall credit profile, with the potential to support the company's long-term strategic goals.