Small wonder there’s a mini M&A boom at the moment –  just at look at the cost of borrowing for big, stable companies like BHP Billiton.

Citigroup reckons the $45bn credit facility put in place by the miner to finance its hostile offer for PotashCorp is likely to be just 3-4 per cent.

From Citi:

Key conclusion is that funding cost at current rates will initially be <2% (3 month LIBOR ~33bps, 1 year ~91bps), but this is likely to increase to 3-4% as the US$25b “bridge” loan is termed out to 5 to 10 year fixed rate via the corporate bonds.

We were assuming a cost of funding for the deal of closer to 5%, which would have created an annual interest bill of around $2.1bn; we estimate the above facilities could drop the cost of funding by at least $1bn in the short term.

Obviously, the 3-4 per cent figure needs to be put in the context of  sub-3 per cent 10-year US government bond yields and the Fed’s near zero interest rate.