BP raises nearly US$12b in hybrid bonds issue

[BENGALURU] British oil major BP has raised US$11.90 billion in debt through an issue of hybrid bonds in multiple currencies, a spokesperson told Reuters in an emailed statement, as the company seeks to take advantage of low interest rates to fortify its balance sheet.

BP raised US$5 billion, 4.75 billion euros (S$7.44 billion) and £1.25 billion (S$2.19 billion) in the United States, Europe and the United Kingdom, respectively, according to IFR data.

This is the first time the company has raised money by issuing hybrid bonds, which place less strain on the balance sheet as the principal is not required to be repaid, the spokesperson said.

The fundraising comes days after BP decided to write off up to US$17.50 billion from the value of its assets, betting the Covid-19 crisis would pressure energy demand and accelerate a shift away from fossil fuels.

Like its rivals, the British oil major is set to take a big hit to revenue from an unprecedented collapse in demand due to the coronavirus outbreak. The impairments are set to raise its debt burden sharply and increase pressure to reduce its dividend.

The company said earlier this month, it would cut about 15 per cent 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.

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REUTERS