Andy62 mate, BHP debt is terribly low compared to their size....

Andy62 mate,

BHP debt is terribly low compared to their size.
Approx $32B gross debt ($25B net) is accruing net interest charges of only USD$1.2B in FY14.
They have fixed a lot of debt at between 3.8 and 5% for 10 to 30 years (out to 2043!). They have redeemed higher costing debt where they can on good terms, and are paying interest rates for new borrowings of about 5-10 years maturity at 2 to 3%.
BHP has immense financial strength (roughly as below):
- net debt $25B is approx equal to only 1x annual free cash flow of $25B
- net debt $25B is only 3x annual post tax profit
- annual interest is only 0.1x annual profit
BHP's financial strength means that they can borrow long term at extremely low rates.

The current circumstances are a never-before-in-our-lifetime low interest situation where BHP can borrow long and cheaply.

The only risk to shareholders is that they might use this capacity imprudently to buy or develop assets that would be losers - it is a real risk to be sure (and BHP has made mistakes in the past), but they are currently prudent and are mostly developing brown fields assets with ROI>>>20%.

DYOR