Fortescue Metals Group have launched back into the bonds market, continuing with debt repayment strategies.
The initial offering of senior secured noted yesterday was announced at US$1.5 billion, however due to increased demand the offering was upped to US$2.3 billion.
FMG expects to raise US$2.203 billion after discounts and issue commissions, which will be used to settle outstanding unsecured notes and further debt reduction to 2019.
The bonds were issued at interest of 9.75 per cent per annum over seven years, with a non-call period of three years.
CEO Nev Power said strong demand from the market influenced the decision.
“We’ve seen strong demand from the market which will result in repayment of our 2017 and 2018 debt in full, refinancing of US$450 million of our 2019 debt and an additional US$350 million to further strengthen our balance sheet,” he said.
“Once again the US capital markets have shown great support for Fortescue.
The March 2015 quarterly results, reduction in operating costs and our track record of delivery have all been key factors in this great outcome for Fortescue.”
CFO Stephen Pearce said the heightened demand would strengthen Fortescue’s financial position by allowing an extension of their debt maturity profile, while maintaining flexibility and ensuring no maintenance covenants on debt.