Mixed ratings benefit Fortescue's issue
Fortescue Metals Group raised US$2.04 billion, via sale of five-year notes, to mark the biggest-ever sale of junk bonds by an Australian borrower.The notes were sold at a lower-than-expected yield as the deal largely benefitted from a mixed rating, with Fitch Ratings awarding as high as BB+ compared with Moody's B1 and Standard & Poor's B.The seven per cent notes were sold at a spread of 575 basis points over Treasuries.Fitch was the first agency to rate the issue, giving the company credit for high operating profit margins, potential for future growth and stating its business profile was more in line with the BBB rating category, but the ratings were constrained by its variable financial profile.S&P, however, assigned a lower B rating as it believes the company needs to articulate its financial polices further. Moody's also raised concerns over the uncertainty surrounding the future financial profile of the company.