Glencore digs up multi-tranche bond
Glencore is bringing a US$3bn multi-tranche senior unsecured offering to market today, benefiting from a more optimistic financing backdrop following reports that the White House could narrow the scope of potential tariffs set to kick in on April 2.
The rally in stocks and other risky assets today amid optimism around US trade policies helped attract Glencore and 16 other investment-grade borrowers into the US dollar market today.
Leads BMO, CIBC, Santander and TD Bank started marketing the threes, fives and 10s at Treasuries plus 115bp area, 135bp area and 160bp area, respectively. In the early afternoon, Glencore's financing subsidiary launched the US$550m three-year, US$750m five-year and US$1.2bn 10-year notes at a spread of 90bp, 110bp and 135bp, with each tranche coming in 25bp from the mid-points of IPTs.
Glencore is a regular borrower in the US dollar market and typically issues bonds at least once every year. The Anglo-Swiss mining company last raised greenbacks in March 2024, when it priced a US$4bn offering.
“For Glencore, this is their normal course of action," CreditSights analyst Wen Li said on Monday.
The bond offering from Glencore comes after British-Australian mining giant Rio Tinto priced a wildly oversubscribed offering on March 11, in connection with its acquisition of Arcadium Lithium. At the time, Rio paid high new-issue concessions to raise US$9bn amid heightened market volatility and a congested supply calendar.
Though both Glencore and Rio are large publicly listed miners, they were not directly comparable, said Li. He noted that Rio's deal had A1/A/A ratings, whereas Glencore's senior bond today is rated A3/BBB+. Glencore's lower rating was reflected in its relatively wider spreads.
Nonetheless, Glencore is expected to achieve a much better outcome in part because of the timing, he said, noting that leads had set IPTs close to its secondary levels, while the broader capital markets, including US equities, were trading up.
"Price talk is not much wider than where their existing bonds are trading at," Li said, before the deal launched. "There is more than sufficient demand to meet supply."
Monday's trade also included an unusual US$500m 1.5-year floater that launched at SOFR plus 75bp.
The floating-rate tranche's inclusion indicated the strong continued demand for the instrument, said a banker away from the deal who expected other borrowers to follow suit with similar short-dated offerings. Volkswagen and BMW are among some of the European corporate issuers to have priced such securities last week.
Still, the 1.5-year floater maturity is rarely seen in the onshore US investment-grade market, with Georgia Power the only corporate issuer to have printed such a bond this year, according to IFR data.
Additional reporting by Sudip Roy