Published: July 30, 2013
South African miner responds to declining gold market.
South African gold mining company Anglogold Ashanti has raised US$1.25bn in a bond issue on Friday. The 10-year paper comes with a coupon of 8.5%, up from 5.125% when the company last went to the market almost exactly a year ago. The deal was managed by Citi, Goldman Sachs and Deutsche Bank.
With the gold market forecast to decline over the medium-term due to low inflation and the removal of Federal Reserve stimulus spending, gold miners have been trying to cushion the blow. Anglogold Ashanti has offered to buy back all US$732.5mn of convertible bonds due in May 2014 and to pay those bondholders in cash, under the assumption that few would choose to convert their holdings to equity.
Anglogold Ashanti’s share price has halved since the start of 2013. Two weeks ago it had its debt rating cut to junk by Standard and Poor’s with Moody’s reducing the company to the lowest investment grade soon after.