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By Danielle Robinson
NEW YORK, Feb 10 (IFR) - BP Capital Markets was able totighten its official guidance on a four-part US dollar benchmarkbond this morning by 15bp from initial price thoughts, asinvestors moved back into top quality energy names.
The offering of two, three and five-year fixed and floatingrate notes, is the first opportunity this year for investors tobuy a blue chip major's bonds in bulk, at a time when oil pricesare showing signs of recovery.
In the past week the WTI crude price has gone from US$47.00a barrel to US$52.00, a rebound which has fueled a rally in thebest quality energy bonds that were indiscriminately dumpedduring the worst of the oil price decline in January.
Although some commodity strategists warn that oil couldstill suffer further declines in price, investors are anxiousnot to miss out on bargains that could make their year'sperformance.
"The deciding factor on how well you do as an investor thisyear will be determined by the outcome of energy," said ScottKimball, senior portfolio manager at Taplin Canida and Habacht.
"You cannot ignore the most beaten up sector in the market,because if you do, then you could miss out on some very niceyields and tightening up on spread as the market realizes thatmany high grade companies have been dramatically oversold."
On Monday MPLX, Marathon Petroleum Corp's MLP, attractedUS$4.2bn of demand for a US$500m 10-year bond offering.
BP has put guidance of 70bp area on its three-year fixedrate note, plus or minus 5bp, from 85bp initial price thoughts,and 85bp area on the five-year from 100bp whispers.
It is also offering a two-year FRN, talked at 40bp overthree-month Libor from IPTs of 50-55bp.
At official guidance the five-year tranche offers about7-12bp of new issue concession, versus its outstanding 2.521%January 2020s, which were quoted at a Treasury curve-adjusted'G' spread of 73bp pre-announcement.
BP's 2020s have rallied 10bp since last Tuesday and about20bp since mid December.
Active bookrunners on the deal are Credit Agricole, GoldmanSachs, Mizuho and RBS. (Reporting by IFR reporters; Writing by Natalie Harrison;Editing by Shankar Ramakrishnan)
