Teck Resources Ltd. is hoping to tap investors’ sudden surge of enthusiasm for the mining sector as it seeks to raise $1-billion (U.S.) in a debt offering.
The Vancouver-based miner lost its investment-grade credit rating last fall as it struggled with low coal prices and big requirements for capital spending, especially for the Fort Hills oil sands project in Alberta.
Amid a general funk in commodity values that drove prices for many industrial metals to their lowest levels since the financial crisis, Teck and many other base-metal miners saw their debt sink to deeply distressed levels in January. In a remarkable turnaround, miners’ bonds have surged since then as investors have grown convinced that the worst is over for commodities.
Teck will now test the market’s appetite for new mining debt with a $1-billion placement of senior unsecured notes. The debt, which is likely to price on Thursday, will mature in 2021 and 2024 and will be guaranteed by some of Teck’s subsidiaries.
The miner said on Monday that it will use the proceeds from the placement to buy $1-billion of its own notes that mature between 2017 and 2019. The overall effect will be to push out the company’s debt maturities.
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