BHP May Pin Record Loan For Target Rio

BHP Billiton is expected to determine sub-underwriting banks for its record $550 billion loan backing hostile bid for Rio Tinto this week, though growing pressure on banks’ capital, said banks sources. BHP and its mandated banks engaged in talks with ten banks to sub-underwrite the deal at the end of February. Each was asked for commitments of $2.5 billion. Most banks have responded positively, but the deadline could extend beyond this week because of the challenging size of the commitments amid difficult market conditions, bankers said. The loan has an interest margin of 50-65 bps, which doubles the margin of 22.5-32.5 bps paid by Rio Tinto on the $40 billion loan that backed its acquisition of Alcan. Earlier reports said that $40 billion will finance the bid, while the remained will back the company’s 30-billion-dollar share repurchase. 30% of the loan will reach maturity in one year, and the rest will be 3 years or 5 years. COPYRIGHT All rights reserved. The copying, republication or redistribution of WAM News Content, including by framing or similar means, is expressly prohibited without the prior written consent of WAM.