RPT-Iron ore gloom chills Fortescue bond sale
(Repeats item first issued on Thursday with no changes to text)
By Mariana Santibanez and Sonali Paul
NEW YORK/MELBOURNE, March 20 (Reuters) - A treacherous snowstorm snarled flights the day Fortescue Metals Group's CFO touched down in New York on a mission to tap the loan market for $2.5 billion to help the world's no.4 iron ore miner ride out collapsing iron ore prices.
Fortescue was looking to take advantage of cheap money to pay off notes due two to four years from now and seek an extension on a further $4.9 billion loan so it would have nothing due till next decade.
The timing was terrible - as Stephen Pearce battled through the frigid Manhattan weather, another squall was brewing in the iron ore market that would blow his efforts off course and force Fortescue to scrap its attempted refinancing.
Over the next two weeks, as Pearce and his advisers at Credit Suisse and JPMorgan tried to raise $2.5 billion in first the loan and then the bond markets, iron ore prices slumped from $62 to a six-year low below $58 a tonne, half the price they were at a year ago.
Fortescue also misjudged the appetite of investors who had just forked out $10 billion to Valeant Pharmaceuticals in the second-biggest junk bond sale on record. They had also just snared a 10 percent yield on a $1 billion issue by top U.S. coal miner Peabody Energy.
The pulled deal underscores a collapse in investor confidence for the once unassailable iron ore sector, which powered through the global financial crisis on the back of China's seemingly insatiable appetite for the steel-making ingredient.
"You just don't do $2.5 billion in a dangerous sector, especially after the Valeant trade," said a debt investor who declined to be named. Continuación...