By Art Patnaude
Commodities giant Glencore International PLC (GLEN.LN) has
priced the 200 million sterling ($321 million) tap of its bond
maturing in April 2022, one of the banks running the sale said
Monday.
The deal increased the size of the bond to GBP500 million.
The bond priced at 300 basis points over the corresponding gilt.
The deal has a coupon of 5.5%, and yields 4.639%.
The debt becomes more expensive for Glencore if its merger with
Xstrata is not completed by April 3, 2013, when the first annual
interest payment comes due. In this scenario, the coupon of the
bonds would increase to 6% from 5.5%, according to a bank working
on the sale.
Glencore and Xstrata are in the midst of securing shareholder
and regulatory approval to create the world's fourth-largest
diversified miner with a market capitalization of about $70
billion.
In a second coupon step-up clause, Glencore's bond would
increase to 6.75% if the company loses its investment-grade credit
rating. Moody's Investors Service rates Glencore Baa2, two notches
above junk, while Standard and Poor's Rating Services rates the
company three notches above junk at BBB+.
HSBC and Santander were lead managers on the deal.
Write to Art Patnaude at art.patnaude@dowjones.com