HG bonds: Rio Tinto targets 2025 notes with new long bonds; terms

Rio Tinto Finance (USA) Inc. today completed a $1.25 billion offering of 2.75% 30-year notes due Nov. 2, 2051, at T+85.

Proceeds will be used to fund a tender offer to purchase $1.2 billion of 3.75% notes due June 2025 and to substantially fund the redemption of all of the 2025 notes remaining after the tender offer, according to regulatory filings.

The 2025 notes were originally placed in June 2015 — the last time the company tapped the U.S. bond market — as a $1.2 billion offering at T+145.

The issuer is a subsidiary of the British-Australian diversified mining company Rio Tinto Group, which is headquartered in London.

The parent company's A/A2/A issuer credit rating reflects stable outlooks on all sides.

Fitch affirmed its A rating and outlook in April. "Low debt levels underpin Rio Tinto's financial flexibility. We forecast funds from operations (FFO) net leverage to remain low at close to 0.5x over the medium term but free cash flow (FCF) on average to turn negative over 2021-2022 on higher capex and dividends and closer to neutral from 2023," Fitch said at the time.

Also in April, S&P Global Ratings said the stable outlook on its A rating reflects a view of limited downside prospects for the profile over the coming 12-24 months.

Terms: