18th Jun 2020 10:14
(Alliance News) - BP PLC raised USD12 billion by issuing debt with equity-like features on Wednesday, marking the largest ever sale of so-called hybrid bonds, the Financial Times reported.
The newspaper noted that BP had never previously tapped the hybrid market, and its debut demonstrated the growing appeal of the category debt for corporate treasurers.
Hybrids place less of a strain on a company's balance sheet because the principal never has to be repaid, the FT noted, and only half the amount is typically counted as debt.
The oil major raised USD5 billion in dollars, EUR4.75 billion in euros and GBP1.25 billion in sterling, and locked-in annual interest costs as low as 3.3% on some of its new euro notes, according to the FT.
https://www.ft.com/content/6213ac92-9d7b-41da-9353-a2be17a37a96
The fundraising comes just days after BP said it would take a writedown of up to USD17.5 billion after cutting its forecasts of future energy prices.
On Monday, the London-headquartered oil major said it sees the prospect of the coronavirus pandemic having an enduring impact on the global economy, with the potential for weaker demand for energy for a "sustained period".
The energy company revised its long-term price assumptions, lowering them and extending the period covered to 2050 so that it is now consistent with its long-term target of becoming a net zero company by 2050.
BP said this will lead to non-cash impairment charges and write-offs in the second quarter ending June 30, estimated to be in an aggregate range of USD13 billion to USD17.5 billion post-tax.
BP shares were trading 0.6% lower in London on Thursday at 314.95 pence each, giving it a market capitalisation of GBP63.95 billion.
By Evelina Grecenko; [email protected]
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