Freeport Indonesia to process 400,000t of copper concentrate at new smelter
Earlier this month, Freeport obtained an export permit for the rest of the year from the government.
State-owned Indonesian miner PT Indonesia Asahan Aluminium (Inalum) on Thursday sold $4 billion of bonds in its first-ever U.S. dollar bond deal to fund the acquisition of a majority stake in the world’s second-biggest copper mine.
The deal came amid choppy global markets, rocked by trade concerns and slowing economic growth in Asia – including Indonesia – that have made it hard for emerging market borrowers to attract investor interest. The coupon on the bonds was lower than the initial guidance.
Inalum will use the funds to buy shares in Freeport-McMoRan Inc’s local Indonesian unit, which owns the Grasberg mine in the eastern province of Papua
Inalum sold a tranche of three-year bonds at a yield of 5.230 percent, five-year bonds at 5.710 percent, 10-year bonds at 6.530 percent and 30-year bonds 6.757 percent, according to a copy of the term sheet for the sale reviewed by Reuters.
That compared with initial guidance ranging from 5.875 percent to 8 percent.
Inalum sold $1 billion in three-year and 10-year bonds each, $1.25 billion in the five-year bonds, and $750 million in the 30-year paper, according to the term sheet.
The bonds were sold slightly below face value. Inalum will use the funds to buy shares in Freeport-McMoRan Inc’s local Indonesian unit, which owns the Grasberg mine in the eastern province of Papua.
Freeport agreed in July to sell its stake to the Indonesian government for $3.85 billion, ending a long-running dispute with the government which is seeking to gain greater control over its mineral wealth.
The sale occurs during a period of market turmoil which has seen Asian issuers hit particularly hard as rising U.S. interest rates have pushed up borrowing costs.
The sale drew over $20 billion in investor orders, a majority of them from the United States.
Asset managers and fund managers represented the bulk of investors, making up 78 percent to 86 percent of buyers.
The bonds are expected to be rated BAA2 by Moody’s and BBB- by Fitch.
There is some uncertainty around the Grasberg deal as the Indonesian government says it is binding while Freeport and Rio Tinto say it is non-binding.
The bond deal includes a clause that says the bonds will be redeemed at 101 percent of face value if the acquisition is not completed by June 30, 2019.
BNP Paribas, Citigroup Inc and Mitsubishi UFJ Financial Group were the joint global coordinators for the deal.
(Reporting by Julia Fioretti; Editing by Christian Schmollinger)
