(Adds details, background, analyst comment)
By Ron Bousso and Kanishka Singh
LONDON, June 18 (Reuters) - BP Plc has raised nearly
$12 billion in debt, taking advantage of low borrowing costs
days after the oil and gas company wrote down 10% of its value
as part of its shift towards cleaner energy.
BP on Wednesday raised $11.9 billion in multiple currencies,
a spokeswoman told Reuters in an emailed statement, tapping for
the first time hybrid bonds which place less strain on the
balance sheet as the principal is not required to be repaid.
BP raised $5 billion, 4.75 billion euros ($5.34 billion) and
1.25 billion pounds ($1.56 billion) in the United States, Europe
and the United Kingdom, respectively, according to data.
The fundraising comes after BP decided earlier this week to
write off up to $17.5 billion from the value of its assets,
betting the COVID-19 crisis would pressure energy demand and
accelerate a shift away from fossil fuels.
The large writedown was set to sharply increase BP's
debt-to-equity ratio, known as gearing, that stood at 36% at the
of March, excluding leases, which exceeded BP's target of
maintaining it in a range of 20% to 30%.
BP's debt stood at $78.5 billion at the end of March,
according to Refinitiv data.
But due to the hybrid bond structure, the new debt will be
considered for accounting purposes as BP equity, helping BP to
reduce the gearing ratio to around 34% in the second quarter,
Credit Suisse analyst Thomas Adolff said in a note.
Rivals including France's Total and Spain's Repsol
have used hybrid bonds in the past.
"Overall, while more expensive than senior bonds, hybrids
diversifies the long term capital structure, is supportive to
credit metrics ... and further strengthens the liquidity
position in what is admittedly still a highly uncertain macro
backdrop," Adolff wrote.
It is unclear how the bond will influence BP's decision to
maintain or reduce its dividend as it is set to take a big hit
to its revenue from an unprecedented collapse in demand due to
the coronavirus outbreak.
The company said earlier this month, it would cut about 15%
of its workforce in response to the coronavirus crisis and as
part of Chief Executive Bernard Looney's plan to shift the oil
and gas major to renewable energy.
($1 = 0.8888 euros)
($1 = 0.7988 pounds)
(Reporting by Kanishka Singh in Bengaluru;
Editing by Vinay Dwivedi and David Evans)
BP (BP.)
