Bloomberg - Fortescue Metals Group Ltd

Orlando Gemes

Hermes Fund Managers

Bloomberg - Fortescue Metals Group Ltd. is taking advantage of rising iron-ore prices to cut Australia's largest junk-debt burden, spurring its best bond gain this year. Fortescue, forced to negotiate $5 billion in new loans last year when commodity prices tumbled, this month said it will repay A$140 million ($131 million) of its most expensive debt to reduce interest costs. The Perth-based miner's total debt is 2.4 times equity, higher than 25 of the 30 other companies in the Merrill index for which data is available. I The iron-ore price has stayed high enough for long enough and now Fortescue is delivering on volume growth, said Ben Byrne, a credit sector specialist at Citigroup Inc. in Sydney. The result is the company is generating very solid cash flows at the same time that capital expenditure is declining.

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Orlando Gemes
Orlando Gemes
Head of Structured Credit
Hermes Fund Managers

Orlando joined Hermes Fund Managers in 2010, and is responsible for structured credit solutions.


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