Question
Can you help me in this part for Rio Tinto Ltd (a British-Australian Mining Coporation): The topic of this part of the assignment is covered
Can you help me in this part for Rio Tinto Ltd (a British-Australian Mining Coporation):
The topic of this part of the assignment is covered in Week 3. The company is planning to raise $50 million by issuing new bonds. The proposed new bonds will carry a 5% semi-annual coupon rate and have a maturity of 10 years. Your task is to determine the total proceeds expected from this bond issuance. To proceed with this task, you must first determine the company's current credit rating by researching various sources, including credit rating agencies, company website, financial reports, and other relevant data.
Secondly, conduct research on the credit spreads of Australian corporate bonds over Treasury bonds issued by the Australian government. You can find relevant information on the Reserve Bank of Australia (RBA) website under "Aggregate Measures of Australian Corporate Bond Spreads and Yields."
Assuming the company maintains the same credit rating as its current rating, estimate the yield investors would demand on your companys new bond issue, calculate the price of the bond, and determine the total amount your company can raise. To do this, you will also need information on the current Australian government bond yields, which can be obtained via the RBA website under Capital Market Yields Government Bonds Monthly.
Finally, explain with reasoning if you anticipate any changes in the companys credit rating based on your analysis in Part B of the assignment. Additionally, assess how higher or lower credit ratings may influence the bond's attractiveness to investors and its pricing, which ultimately affects the total proceeds generated from the bond issuance.
All the number can be found on investing.com and Yahoo finance.
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