BP (BP) Sells $3.7 Billion of Debt as Demand Rises

The increase in oil prices has given investors in the bond market more confidence, and BP (NYSE:BP) was able to sell $3.7 billion in debt as a result, as demand for corporate debt rises.

BP Capital Markets Plc, a unit of Europe’s second-largest oil company, sold $1.6 billion of 3.2 percent 5-year debt that yields 100 basis points more than similar-maturity U.S. Treasuries and $1.4 billion of 4.7 percent 10-year notes at a spread of 120 basis points, according to data compiled by Bloomberg. The company also issued $700 million of floating-rate bonds.

The cost to protect BP debt is approaching the lowest level since an April explosion in the Gulf of Mexico caused the largest offshore U.S. spill in history. Demand for energy company debt has increased as crude prices have gained about 15 percent in New York this year.

“If you’re an integrated oil company, then definitely rising oil prices have helped corporate bond spreads,” said Rajeev Sharma, a money manager in New York at First Investors Management Co., where he helps oversee $1.5 billion.

The energy company is paying 60 basis points more than the 3-month London interbank offered rate on the three-year floating-rate debt. BP initially marketed $500 million of the securities.

BP closed Tuesday at $47.81, down $0.34, or 0.71 percent.




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