- Teck Resources' (TCK) larger than expected $1.25B bond offering at higher interest rates than the older debt it is replacing as seen as a sensible move that that allows it to refinance debt and provides some financial flexibility.
- TCK will issue $650M of 8% notes due in 2021 and $600M of 8.5% notes due in 2024 to buy back up to $1B of notes that come due much sooner; the interest rates on the debt it is buying back are between 2.5% and 3.85%.
- By pushing out debt maturities by several years, TCK has provided itself a buffer to get the Fort Hills oil sands project up and running without getting stretched; it has committed $2.9B to Fort Hills and still has nearly $1B of spending remaining before first production, which is expected in late 2017.
- While the deal gives TCK breathing room, the company had $8.6B of debt outstanding at the end of March, but TCK has more than $5B of available liquidity and much of the debt does not come due for decades.