BP $5 Billion Debt Offering May Yield Up to 10%
BP executives met in London Friday with investment bankers to discuss a likely bond offering as early as Tuesday, according to people familiar with the matter.
The people involved in the discussions say it's likely the offering will consist of unsecured bonds with a combination of 5- and 10-year maturities that will yield 8 to 10 percent. That's significantly more than the current yield on 10-year US Treasury bonds.
The goal is to raise $5 billion—more if the market is receptive—and to restore confidence, according to people familiar with the matter.
But the company would also like to have additional credit lines on layaway, say these people, as the costs of its April 20 Gulf spill mount.
Bankers believe the prior goal to raise $10 billion of capital might be overly optimistic, say the people familiar with the matter, but admit it's hard to value the risk in BP right now.
The company wants to be realistic about market sentiment and not overreach, add these people, who say that discussions between BP's bankers and its management remain fluid.
BP's spokesperson said the company doesn't comment on financing.
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