Fortescue Metals Group (ASX: FMG) is planning to issue the largest junk bond issue in Australia. The firm aims to raise $1 billion through the bond issue that will be made up of two tranches.

The first tranche would have five year terms and be callable after three years. The second tranche would have a 10-year term and be callable after five years.

To run the bond issue, Fortescue hired Bank of America Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan, Royal Bank of Scotland and UBS. The money raised would be used for equipment financing and general corporate purposes.

The Wednesday announcement of the $1-billion senior unsecured notes comes after Fortescue said it would triple its iron ore production in Pilbara and days after rating agency, Standard & Poor's, upgraded the company's credit rating to B+ from BB-.

The B+ rating is considered below investment grade, but moves Fortescue closer to leaving junk rating. S&P warned Fortescue that its $8.4-billion growth strategy to export 155 million tonnes of iron ore yearly has a negative impact on the company's credit rating.

The rating agency said it could still raise Fortescue's rating if it delivers the project on time and on budget, but could downgrade the rating if iron ore prices dip below $120 per tonne. Current iron ore price is $140 per tonne.

Industry observers were surprised that Fortescue opted for only $1 billion and not a large amount since the firm has been valued recently at $1.6 billion. Since $1.2 billion funding for the $8.4-billion project remains unsourced, observers said Fortescue may return to the debt markets again later this year to find the remainder of their funding.

Fortescue successfully raised $1.5 billion on U.S. markets in 2011. The firm is expected to tap the same market for this new offering.

On news of the junk bond sale, Fortescue shares rose 2 per cent to A$5.885. The company's stocks were among the most actively traded shares in the ASX on Wednesday, besides Rio Tinto and Woolworths.

"From my perspective you have a very easy financial decision to make - you certainly do not need weeks or months to consider. I am sorry if you have been confused by anyone else," replied the iron ore magnate.

John rejected the statement of youngest sister Ginia - who has sided with their mother - that he was living on inherited projects and royalties. John insisted he used his skills to earn money, while he criticised Ginia for having a Rolls Royce at age 25.

Hope added she is saddened by Ginia's statement and insisted their purpose in filing the lawsuit was to ensure that the assets and income of the trust "are managed in a proper and lawful fashion."

At the heart of the ugly and public family feud are billions of dollars in the trust which holds a 25 per cent stake in Hancock Prospecting.

In 2006, Ms Rinehart signed an agreement with her children that allowed her to extend the vesting date of the trust. The deal the children would get in return for signing the extension 25 per cent of the Hope Downs mine net cash flow after tax and another 25 per cent less any amounts for developing the tenements.

With the upgrade to the mine and projected production increase to 22.5 million tonnes from 15 million tonnes, and based on the assumption that commodity prices will remain strong and costs are contained, the amount of cash that Hancock would get from Hope Down would go up to $2 billion. That means the four would be entitled to $1 billion a year or about $250 million yearly for each child.

Despite the current massive development which could reduce the children's take, the four still stand to earn at least $125 million each if the current iron or prices and industry conditions stay unchanged.

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