Credit-Positive Cash Tender Offers Support Debt Reduction for Mining Issuers
DBRS Limited (DBRS Morningstar) believes that the current environment of rising interest rates has provided an opportunity for mining issuers with surplus cash balances. Mining issuers are making credit-positive moves by using cash tender offers (CTOs) to reduce debt. These issuers are enticing their bondholders to accept cash that can be redeployed as the impact of the higher interest rates and inflation become clearer. DBRS Morningstar also notes that, while the longevity of the current tightening cycle remains unclear, as interest rates keep rising and bond prices continue to decline, the attractiveness of CTOs to bond investors should be maintained through the remainder of the current cycle.
DBRS Morningstar is a global credit ratings business with 700 employees in eight offices globally. DBRS and Morningstar Credit Ratings are committed to empowering investor success, serving the market through leading-edge technology and raising the bar for the industry.
Together, we are the world’s fourth largest credit ratings agency and a market leader in Canada, the U.S. and Europe in multiple asset classes. We rate more than 2,600 issuers and 54,000 securities worldwide and are driven to bring more clarity, diversity and responsiveness to the ratings process. Our approach and size provide the agility to respond to customers’ needs, while being large enough to provide the necessary expertise and resources. For more details visit us at dbrs.com.
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