Rio Tinto has defied treacherous credit markets to raise a record-breaking $40 billion (£20 billion) to finance its takeover of Alcan, the Canadian aluminium producer.
The bumper amount raised by the British miner represents the biggest ever loan to a UK-listed company and the fourth-largest worldwide, according to Dealogic, the investment banking data provider.
It comes amid almost unprecedented volatility in both the equity and debt markets, which have been seen as closed to all but the most highly rated companies. Rio Tinto is rated A+ by Standard & Poor’s and Aa3 by Moody’s.
A spokesman declined to go into detail ahead of the deal’s completion. He would say only: “We’ve said all along that we have been confident it would be successful; we are very pleased with how it’s gone.” It is understood that the loan was comfortably subscribed with orders from numerous individual investors.
The success of the deal suggests that some parts of the credit market remain open, despite bankers bemoaning the most treacherous week in the market last week in the past four years.
The spokesman also played down suggestions that Rio Tinto would have had to pay more to complete the financing, given market conditions. He said that the loan terms were “in line with our expectations all along”.
Syndication of the record loan closed yesterday, with completion still subject to finalisation, which is expected over the coming days.
Four lead banks put the loan together: Deutsche Bank, HSBC, SocGen and Credit Suisse.
Rio Tinto unveiled plans to raise the capital in July, a matter of days after the value of two hedge funds run by the Wall Street bank Bear Stearns collapsed amid a rout in the sub-prime mortgage market in the United States.
This month, Standard & Poor’s said that Rio Tinto’s A+ rating could be cut by several notches as the company sharply boosted its borrowing.