Barrick, the world's biggest gold stock by output and value, has announced a $750m corporate bond. The net proceeds of the offering will be used, said Barrick, for general corporate purposes, including to fund construction at Barrick's projects and make investments in Barrick's subsidiaries.The 6.95% notes due 2019 can be price-compared to the $3.25bn global bond issue launched earlier this week by BHP Billiton, the world's biggest diversified resources stock, where $1.5bn 5.5% senior notes are due in 2014 and the $1.75bn 6.5% senior notes are due in 2019. This would suggest that BHP Billiton was able to tune into a finer rate than Barrick for the longer dated notes.Barrick and BHP Billiton own some of the strongest balance sheets in the world. On 31 December 2008, Barrick carried the gold industry's highest credit rating, a cash balance of $1.4bn, a $1.5bn undrawn credit facility and net debt of $2.9bn with scheduled repayments of less than $300m over the next four years. The market value carried by Barrick is the biggest among gold stocks, as mentioned, at $29bn. BHP Billiton held $4.2bn in net debt on 31 December 2008; its current market value is $119bn, ranking it as one of the biggest stocks in the world.The BHP Billiton and Barrick capital raisings are a rarity in current global markets. While mining companies have been able to raise $45bn from non-bank sources over the past two to three months, raisings have typically been transacted via rights issues, which are dilutive.Three formats are typically seen: a straight issue, such as the AUD 750m raised by Newcrest; a raising which includes new shares, plus a half or a full warrant, such as the $290m issue completed by Agnico-Eagle, and convertible notes, a kind of quasi debt where notes are converted into common shares of the issuing stock at some future date. An example of the latter was seen in Newmont's recent successful issuing of $518m convertible notes. All three formats are dilutive, in differing degrees; BHP Billiton and Barrick are issuing old fashioned, hard core corporate bonds.In a recent research note on Barrick, analysts at RBC Capital Markets commended the company for free cash flow growth, but saw its future hedge book as a handicap. Free cash flow for Barrick is seen as growing by $480m to $1.1bn in 2010 from $0.6bn in 2009. New mine development - three new low-cost mines to be completed over the next three years - is expected to be supported by a strong balance sheet.However, commented RBCCM's analysts, the company continues to be handicapped by a hedge book that has seen the current realized value of the 9.5m ounces hedged decline from $374/oz to $364/oz in the past quarter. At a $1,000/oz gold price, the mark-to-market of the book is negative $6bn and changes by $0.95bn for every $100 move in the gold price.

Seen on a composite basis over the past 12 months, Barrick's stock price is the least impressive among the global Tier I gold grouping, which includes 14 names. The best composite performance over the period has been displayed by AngloGold Ashanti, which, among other positive actions over the period, has attacked its hedge book, and has signaled every intention to continue with the process.Global tier I gold stocks

Stock

From

From

Value

price

high*

low*

$bn

Yamana

$9.24

-45.6%

179.2%

6.771

Goldcorp

$33.75

-35.9%

143.9%

24.625

Polyus

$34.00

-57.5%

142.9%

6.481

Harmony

R115.56

-13.0%

121.8%

5.087

Lihir

AUD 3.38

-11.3%

122.4%

5.507

AngloGold Ashanti

$38.67

-1.2%

189.2%

13.678

Zijin

CNY 9.93

-54.9%

164.1%

15.323

Barrick

$33.36

-36.4%

93.2%

29.114

Newcrest

AUD 34.10

-8.3%

106.0%

11.339

Gold Fields

R119.11

-4.7%

123.7%

8.672

Kinross

$18.65

-26.7%

172.3%

12.862

Newmont

$42.90

-20.2%

102.6%

20.528

Buenaventura

$22.55

-39.9%

150.6%

6.199

Freeport-McMoRan

$40.04

-68.5%

155.0%

16.483

[[SPDR Gold Shares ETF]]

$94.35

-4.7%

43.0%

34.041

Tier I averages/total

 

-30.3%

140.5%

182.668

Weighted averages

 

-38.9%

132.0%

* 12-month