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18 Mar 2015
Australian Iron-Ore producer Fortescue scraps HY bond
FXStreet (Bali) - Australian Iron-Ore producer Fortescue has postponed the issuance of a $US2.5 billion high yield bond, with unfavorable market conditions cited. The news could affect AUD sentiment negatively should shares of the company come under further pressure in the Australian stock exchange.
Key Quotes - Sydney Morning Herald
The backflip comes after sources told Fairfax Media that the mining company had offered a rate of as high as 9 per cent in an attempt to lure investors, before the issue was finally pulled.
In a statement to the market on Wednesday morning, chief executive Nev Power said: "Whilst we have no debt maturing until April 2017, the objective of the refinancing was to extend Fortescue's maturity profile and minimise interest costs."
"Debt capital markets were not favorable at this time and, as a result, we think it is a disciplined and prudent decision to defer the voluntary refinancing at this stage."
The price range of 8 to 8.25 per cent was reported by IFR - above the "high 7 per cent area" range Fortescue's bankers, JPMorgan and Credit Suisse were targeting when the deal launched.
NAB credit analysts said that if reports the deal was pulled were true, it would "certainly not [be] a good look following the reported similar failure to attract sufficiently attractive terms for a proposed syndicated loan".
Key Quotes - Sydney Morning Herald
The backflip comes after sources told Fairfax Media that the mining company had offered a rate of as high as 9 per cent in an attempt to lure investors, before the issue was finally pulled.
In a statement to the market on Wednesday morning, chief executive Nev Power said: "Whilst we have no debt maturing until April 2017, the objective of the refinancing was to extend Fortescue's maturity profile and minimise interest costs."
"Debt capital markets were not favorable at this time and, as a result, we think it is a disciplined and prudent decision to defer the voluntary refinancing at this stage."
The price range of 8 to 8.25 per cent was reported by IFR - above the "high 7 per cent area" range Fortescue's bankers, JPMorgan and Credit Suisse were targeting when the deal launched.
NAB credit analysts said that if reports the deal was pulled were true, it would "certainly not [be] a good look following the reported similar failure to attract sufficiently attractive terms for a proposed syndicated loan".