Rio Tinto Syndicates $40B Debt, Plans Bond Issue

Rio Tinto said it has completed syndication of a $40 billion loan that will fund its takeover of Canada’s Alcan and plans to refinance some of the debt through a bond issue. The miner said the success of the debt raising, the fourth biggest ever undertaken, in the middle of a crisis in global credit is an endorsement of the company and the Alcan deal, which will make Rio Tinto the world’s biggest producer of aluminum. The debt was underwritten by The Royal Bank of Scotland, Deutsche Bank, Credit Suisse and Societe Generale, which have syndicated the loan to other lenders. Rio Tinto said the syndication was more than one-third oversubscribed, despite the volatility in global credit markets. "This extremely positive response underlines the strength of Rio Tinto’s existing asset base, the attractiveness of the Alcan transaction and the solid credit profile of the enlarged Rio Tinto group," Chief Financial Officer Guy Elliott said. "This bodes well for our future refinancing plans in the debt capital markets." There had been some speculation in the market that the global credit crunch could make it difficult for Rio to raise the funds for the deal, with lenders drying up as the U.S. subprime loan crisis unfolded. But Rio maintained it benefited from a "flight to quality"with lenders keen to deal with large companies with strong cashflow.