insto - Australian financial markets

IG Markets had this to say on some of the higher profile resources and metals players after the close of business on Friday 20 November:

There has been some talk recently about the iron ore joint venture with Rio Tinto and BHP Billiton. JPMorgan believes the estimate of $10 billion worth of synergies from the joint venture looks conservative, with the figure possible as high as US$13.9 billion. JPMorgan estimates the pretax synergies would be more than US$1 billion per year by the fifth year and could be as high as US$2 billion if you factor in the companies’ expansion plans.

Even before the financial crisis, the Australian corporate bond market was too small to support large development projects.

The need for a bigger, better bond market was one of several strongly made observations from Don Argus, BHP Billiton's chairman, in a recent speech to the Melbourne Mining Club.

However, he certainly came across as a big supporter of an expanded domestic corporate bond market, something that is - somewhat surprisingly to him - lacking in this country.

While many companies are reluctant to admit their potential greenhouse gas costs, the number of institutional investors seeking this information has spiked, repots Bernard Kellerman.

The Carbon Disclosure Project has evolved as the pre-eminent mechanism for communication between companies and investors on climate change and carbon exposure issues. It has been run globally for 7 years, but for the fourth year has been expanded to cover the top 200 Australian and top 50 New Zealand companies.

The mining and energy sectors figured prominently in the second quarter’s major M&A deals, fired up by offshore investors, explains mergermarket’s Louise Weihart.

Volumes for mergers and acquisitions remained a far cry from their earlier heights, but there were some small signs of recovery in the Australian M&A market in the second quarter of 2009.

Deal values were up by some 83 per cent to reach A$15.85bn, compared with A$8.66bn in Q1 2009, the lowest total deal value in four years.

Ben Potter, research analyst for IG Markets saw the week as follows:

Asian markets extended the week’s gains as better-than-expected corporate reports from the US and a rally in commodities lifted confidence globally. The MSCI Asia Pacific index is headed for its fifth monthly gain.

The typical Friday profit taking, especially after such a strong week was replaced by end-of-month buying. The fund manager’s were definitely window dressing today, with Bluescope Steel a prime example.

An improving global outlook seems to have has given the Australian mining industry the confidence to try to brush off the embrace of Chinese government backed companies in favour of major local shareholders, reports Bernard Kellerman.

As Australia entered a long weekend, a series of emerging deals shook up the top end of our mining industry.

Is rolling-up the welcome mat to potential investors with significant China Government backing really in our best national interests? asks Mark Story.

The commodities boom may have cooled, but corporate bonds from the Australian mining sector continue to rate as hot property, writes Jonathan Shapiro.

Resource giants BHP Billiton and Woodside Petroleum led the local charge into offshore corporate bond markets in the first quarter with Rio Tinto following suit in mid April. The mining sector has been a favorite amongst global fixed income investors who have emphatically supported bond issues.

BHP Billiton,rated A+/A1, has issued E2.25 billion of three and seven year bonds.

Pricing was understood to have been 255 basis points over mid swap for the EUR1.25 billion three year fixed rate tranche and 325 basis points for the EUR1 billion seven year fixed rate tranche.

Lead managers on the transaction are BNP, HSBC and UBS

The bond offer follows a US$3.25 billion issue from BHP on 19 March, bringing the total raised from the two recent bond deals to about A$8.5 billion.

The world's largest mining company BHP Billiton announced today (19 March) that it has priced a two tranche global bond under its debt shelf registration statement, previously filed with the US Securities and Exchange Commission.

The global bond, issued by BHP Billiton Finance (USA), comprises US$1.5 billion 5.5 per cent senior notes, due 2014, and US$1.75 billion 6.5 per cent senior notes, due 2019.