Sirius Minerals share price: where now as $500 million junk bond launched?

Sirius Minerals kicks off its roadshow this week with the aim of attracting institutional investor interest in its $500 million high-yield bond.

The bond issuance is part of a massive $3.8 billion stage two financing plan that will provide funding for the development of its Woodsmith fertiliser mine, based near Whitby in North Yorkshire.

Junk bond’s success crucial to Sirius Minerals future

The bond prospectus received a junk bond status from ratings agencies S&P and Fitch ahead of Sirius Minerals three-week roadshow.

The FTSE 250 company is looking to attract enough buyers for its bond to unlock a $2.5 billion revolving credit facility from US-based investment bank JP Morgan.

Sirius Minerals will need to secure its financing package before the end of September or risk lacking enough funds to execute its development plans and increasing the overall value of the company’s stock.

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Sirius Minerals stock likely to see gains on financing success

Many of London’s analysts expect Sirius Minerals’ stock to get a much-needed boost if it can successfully secure the financing it needs.

‘We expect the Senior Debt Event to catalyse a major re-rating of the shares, as it is in our view effectively the key to unlocking Sirius’s vast value potential,’ Shore Capital analyst Yuen Low said in a note to investors.

‘Beyond that, while Sirius would still be some years from becoming cash generative, an investment in the company should become progressively de-risked and enjoy significant value uplift as it advances towards production, we believe.’

Short-sellers have also reduced the size of their holding against the fertiliser development company, with fund mangers reducing their collective short position from 9.12% in May to 4.95%, according to data compiled by ShortTracker.