Melbourne, Australia-based BHP Billiton took advantage of a higher rating from Standard & Poor's to unify its credit lines and push payment rates way down on its $2.5 billion multicurrency revolving credit facility. The improved rating followed the merger of Australian company BHP and London-based Billiton. The merger closed on June 30, to create a multi-national mining company with a single A rating, whereas BHP had a BBB rating, explained Francis McAllister, director of investor relations for BHP in the U.S.
McAllister declined to comment on the changes in the spread, but according to Capital DATA Loanware, the spread on the $1.25 billion, 364-day revolver is LIBOR plus 25 basis points and LIBOR plus 35 basis points and on the $1.25 billion, five-year revolver. A $1.5 billion Billiton revolver arranged last year carried a spread of LIBOR plus 75 basis points. The facility replaces BHP's $1.2 billion credit facility and Billiton's $1.5 billion and $1.25 billion credit lines, said McAllister. Not only does a unified credit line ease the task of tracking borrowings and increase capital management, it explains to the banks that BHP Billiton is now one company, he stated.
The facility was syndicated on a global basis and carries no specific jurisdiction, McAllister said. Bids were sent to a group of international banks for the multicurrency facility, he explained. He declined to comment on which banks took lead roles, but said the deciding factor was relationship banking rather than pricing. There are no plans to draw on the facility at the moment, he said, though the facility can be used for acquisitions in addition to general corporate purposes. BHP is a global natural resources company, engaged in the discovery, development, and production of a range of other natural resources.