BP may sell up to $10 billion of corporate debt as early as next week in an offering intended to boost both liquidity, or cash, as well as confidence, according to people familiar with the matter.
The sale, plans for which have not yet been finalized, would likely involve corporate bonds with a five or ten-year maturity, these people said, and would come at a time when BP’s balance sheet is bogged down by the cost of cleaning up its April 20 Gulf oil spill.
The notion of an offering comes at the suggestion of the oil company’s investment bankers, who have been huddling around the clock with BP officials to figure out how best to shore up the embattled oil company’s balance sheet, say these people. That group includes Goldman Sachs, The Blackstone Group, Morgan Stanley, Credit Suisse, and UBS.
Although the bankers’ discussions with BP management are fluid and change “hour to hour,” according to one of the people familiar with the matter, the bankers have largely agreed that a bond sale might be wise.
BP on Wednesday agreed to put $20 billion into an escrow fund to compensate victims of the Gulf spill. In a call with analysts afterward, the company’s chief financial officer, Byron Grote, told participants that “we do external financing when it’s appropriate.” The company had no capital-raising plans tied “explicitly” to the escrow account, the CFO added.
Analysts have pegged the cost of the BP spill at as high as $63 billion.