Rio Tinto has sold $US3 billion ($3.1bn) in corporate bonds in the US market, making it the biggest high-grade deal since worries about the Federal Reserve pulling back on its bond-buying program stymied new issuance.
Underwriters initially thought the deal could be $US2bn in size, but a source had cautioned that could change throughout the day.
The final size of $US3bn indicates the deal met with good demand from investors. Proceeds will be used for general corporate purposes.
The company played to investor demand for shorter bonds, with the longest bond sold at the weekend maturing in 5 1/2 years.
Bond buyers said that was a good move. Bond prices go up when interest rates go down, and bonds with longer maturities are more sensitive to interest rate changes.
The company would likely have met with less investor demand for 10- or 30-year bonds.
The deal also featured two tranches of floating-rate notes, where the interest on the debt fluctuates with the market. That structure has been growing in popularity with investors concerned about rate increases.
The miner priced two-year and three-year floaters to yield 0.55 percentage point and 0.84 percentage point, respectively, more than the three-month London interbank offered rate, a market benchmark.
A three-year fixed-rate part offered one percentage point in extra yield compared with similar Treasuries, and the 5 1/2-year fixed-rate part offered 1.40 percentage points in extra yield compared with similar Treasuries.
Jesse Fogarty, managing director at Cutwater Asset Management, said his shop put in an order for the three-year floaters.
He noted that the metals and mining sector had underperformed the market due to concerns over recent global growth, but said the floaters offered protection against rising rates overall.
"It made a lot of sense focusing on the front end," Mr Fogarty said. "Certainly in this market they would have had to pay up to get longer-term debt done."
Rio wasn't the only company selling investment-grade bonds at the weekend.
US regional bank BB&T sold $US1bn and investment manager Eaton Vance sold $325 million.
"They took this as a window of opportunity to sell bonds with rates still relatively low historically," said Gary Pollack, managing director at Deutsche Asset & Wealth Management. "Given the negative sentiment over the past two weeks, it was hard to sell in the investment-grade space."
