BHP Biliton Group: long Term Deb(A) in Chapter 9: The global economic slowdown coupled with the falling commodity prices put unexpected pressure on BHP's cash flow. So on march 18, 200 BHP commission to sell $3.25 billon of senior notes. Even though the company was well capitalized. Because of its credit ratings were so strong and its borrowing so low, a prime opportunity to capitlize on these favorable lending conditions existed. The notes would be issued in two tranches with five - and ten-year maturities. The new debt was unsecured, carried no restrictive covenants, and would rank equally with the company's other indebtedness. Rating agencies provided upper- medium grade ratings. The bond issue would only have a modest effect on the company's leverage. Total proceeds from the issue were $3.226 billon, not quite reaching the full stated principal. The company used 18 different underwriters in connection with the offering, with underwriter discounts approximating .35%, .45%, for the 5.5% and 6.5% issues, respectively. The net issue prices after underwriter discounts were expected to be $99.316 and $99.229 other total expenses amounted to approximately $410,000. Although the march 2009 bond issue seemed to be well timed, by the summer of 2010 interest rates and coborate bond yields continued to fall. On august 24 2010, the two 2009 debt issues were quoted as follows: 2014 - Price - $114.84 , Yield to maturity 1.253, Current yield 4.789. 2019, Price 124.83, Yield to maturity 3.173, Current yield 5.207. But what appeared to unfavorable conditions for BHP existing debt would be a potential windfall for future debt. The management of BHP was again considering the companys debt and equity financing needs, although this time in connection with the mid-august $39 billion hostile bid for leading fertilizer producer Potash Corporation Inc. of Saskatchewan. The sustain low rate environment made debt financing this deal particularly attractive. Questions: A. Setting up an ammortization schedule for 2014 notes. B. Approximately what will be the long term debt liability related to these 2014 notes at the end of 2009? 2010? 2011? C. Aproximately how much interest expense will be recorded as a change to income in 2010 for the 2014 notes? How much interest will be paid in cash? D. on 8/24/10 the notes were trading a premium relative to the time issued. Approximately how much was that premium on that date? How should BHP account for this difference? E. In practice, how would the company deal with the 6-day lag between the quarter end date and the issue date of the debt?