Azernews.Az

By Bloomberg

BP Plc, Europe’s third-largest oil company, is selling 2.5 billion euros ($2.8 billion) of bonds in its first sale in the currency since September, according to a person familiar with the matter.

The company is offering 1.25 billion euros of eight-year notes to yield 55 basis points more than the benchmark midswap rate and 12-year bonds at a spread of 75 basis points, said the person, who asked not to be identified because they’re not authorized to speak publicly. The average yield premium for investment-grade corporate bonds in euros has dropped 10 basis points to 63 basis points this year.

BP is raising funds even as the price of oil trades at about $56 a barrel from more than $100 seven months ago. While that has prompted the London-based company to cut spending, axe jobs and freeze pay, BP reported fourth-quarter profit that beat analyst estimates this month.

“My guess is this should go well,” said Ron Daigle, a London-based senior credit analyst at Hermes Investment Management Ltd., which manages 28.6 billion pounds ($43.8 billion). “More difficult deals have been done in the current market and BP is a large, fairly well-diversified multinational integrated oil company rated investment grade.”

David Nicholas, a London-based spokesman for BP, confirmed the sale without giving details of the terms.

BP is “putting out some euro-denominated bonds for general corporate purposes and part of managing the group’s ongoing funding requirements,” Nicholas said when contacted by phone.

Investors bought 2 billion euros of the company’s bonds in September, also maturing in eight and 12 years. BP sold $2.75 billion of notes on Tuesday and has total debt of 35 billion pounds, according to data compiled by Bloomberg.

The average yield on investment-grade corporate bonds in euros fell to a record 0.96 percent on Feb. 9, according to Bank of America Merrill Lynch’s Euro Corporate Index.