By Robert Smith
LONDON, April 8 (IFR) - BG Group's bonds traded up stronglyon Wednesday on the back of Royal Dutch Shell's US$70bn offer tobuy the UK firm.
The strongest rally has been in the oil and gas company'smulti-currency 6.5% 2072 hybrid bonds issued in 2012. The £600mbond jumped from a cash price bid of 107 to 109.75, the 500mtranche from 110.88 to 113.15 and the US$500m piece from 107 to110.49, according to Tradeweb.
BG's senior bonds have also tightened across the board,particularly its longer-dated sterling bonds. The £750m 5% 2036and £750m 5.125% 2025 deals both snapped 30bp tighter on news ofthe deal.
The market appears to be anticipating ratings convergencebetween the two entities, specifically an improvement in BG'sA2/A-/A- senior ratings and a slight weakening in Shell'sAa1/AA/AA score.
Shell's bonds in contrast have widened around 4 to 6bpacross its senior curve. The oil major has said it will pay amix of cash and shares that would value each BG share at around1,350 pence, a premium of around 52% to the 90-day tradingaverage. (Reporting by Robert Smith; editing by Alex Chambers, JulianBaker)
