The chief executive officer of South African mining company Gold Fields Ltd. (GFI) said the company is looking to lengthen the maturities of its loan. Gold Fields revealed its plans after spinning most of its local operations this year and had cut company costs to almost 25%.
The South African company has a debt outstanding worth USD2.1 billion. The debt includes USD750 million that will be due in 2015 and a USD1 billion bond that will mature in October 2020, based on Gold Fields' third-quarter results. The Johannesburg-based company's dollar security yields dipped 135 basis points since it recorded 9.16% on September 12. Indexes of JPMorgan Chase & Co showed that the median rate of emerging-market metals and mining companies' dollar debt decreased 42 basis points in the period.
On November 20, Gold Fields CEO Nick Holland told Bloomberg, "We're looking to see if we can move the tenor of our debt out. You don't want to have too much debt in chunky maturities. If you can try and spread your maturities out, you reduce the risk of major refinancings happening at the same time."
Gold Fields, along with rival AngloGold Ashanti Ltd had been feeling the effects of the gold price drop as the prices dipped 26% this year and was on its way to record its first yearly drop since the year 2000. Gold Fields loan renegotiations will allow the company, which reduced costs in the third quarter and is set to increase its output in Australia and Ghana, to have more room to cope with the seesaw of the price of gold, said Moody's Investors Service, Dion Bate.
Bate said over the phone from Johannesburg, "Our view for all corporates is that a successful attempt to lengthen maturities removes refinancing risk so would be viewed positively. If the bond market or capital-debt markets closed up, a company with a longer-dated credit profile is less at risk."
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