Rio Tinto Offers to Buy Back $3 Billion of Bonds to Reduce Debt

(Bloomberg) -- Rio Tinto Group, the world’s second-largest mining company, offered to buy back as much as $3 billion of its bonds as part of a plan to reduce debt.

The company issued a redemption notice for about $1.5 billion of notes due in 2017 and 2018 and started a cash tender offer for as much as $1.5 billion of notes due from 2019 to 2022, it said in a statement on Monday. The cash offer will expire on Oct. 24, unless extended.

The world’s biggest miners are paying down debt to help combat a downturn in prices that forced them to slash dividends, rein in spending and sell assets. For London-based Rio, which reduced net debt in the first half by 6 percent to $12.9 billion, it’s the company’s third buyback this year after completing $4.5 billion of repurchases earlier in 2016.

Rio shares have climbed 26 percent in London this year, rebounding from a three-year slump.

Moody’s Investors Service last month lifted its outlook for the global base-metals industry overall, and for Rio specifically, to stable from negative on expectations that prices have bottomed.

Rio’s buyback offer applies to its 2 percent notes due March 2017, 1.625 percent notes due August 2017, 2.25 percent notes due December 2018 and 6.5 percent notes due July 2018, according to today’s statement.

The lead managers of the offer are BNP Paribas Securities Corp. and Credit Agricole Securities Inc. and Credit Suisse Securities LLC.

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net. To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin, Tony Barrett

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