The proposed senior secured credit facility will be distributed into the U.S. institutional term loan market and will rank ahead of all other unsecured and unsubordinated debt. The net proceeds of the facility will be used to refinance all existing bank facilities, repayment of the Leucadia loan notes, and for general corporate purposes.
The 'BB-' rating on Fortescue reflects our view of the company's aggressive growth strategy associated with the pace and the funding approach of its expansion projects, limited product diversity, and exposure to volatile commodity prices. These weaknesses are partly offset by Fortescue's relatively long-life reserves, and relatively low-cost and improving iron ore production.