Rio Tinto is taking advantage of a stronger-than-expected commodities market that has bolstered its cashflow, and will buy back US$3 Billion in its US denominated bonds.  That comes out to about A$3.9 Billion.

"Rio is again taking advantage of its strong liquidity position to further reduce gross debt," Rio Tinto said in a statement.

The company hopes to slash as much as US$7.5 billion/A$9.78 Billion off its debt by the end of the year.  Rio Tinto has a strong balance sheet compared to other miners.  Before this, Rio Tinto has repaid $US4.5 billion of future debt obligations, and it also had $US1.5 billion of notes mature in June, which were repaid at the maturity date.

These moves could strengthen the miner's credit rating, which is currently an A- by Standard & Poors.  S&P recently upgraded it from 'negative' to 'stable', and more upgrades could be on the way.

"Reducing gross debt levels removes a criticism it faced from the ratings agencies," said Investec analyst Hunter Hillcoat to Fairfax Media.