British Petroleum raises £9.50 billion via its first hybrid bonds issue

Written by: Wajeeh Khan
June 18, 2020
  • British Petroleum raises £9.50 billion via its first hybrid bonds issue.
  • BP raises £3.99 billion in the US, £4.26 billion in Europe, & £1.25 billion in the UK.
  • The British oil major to establish a global business service centre in Pune.

British Petroleum (LON: BP) said on Thursday that its hybrid bonds issue raised a total of £9.50 billion in debt in multiple currencies. As per a BP’s spokeswoman, the company wishes to benefit from low-interest rates to strengthen its balance sheet. Learn more about the key balance sheet components.

Shares of the company are less than 1% down on Thursday. At 311 pence per share, British Petroleum is more than 30% down year to date in the stock market after recovering from a low of 234 pence per share in March.

BP estimates £13.95 billion of write-downs in Q2

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As per the IFR data on Thursday, the British oil major raised £3.99 billion in the United States, £4.26 billion in Europe, and £1.25 billion in the United Kingdom.

The spokeswoman also highlighted on Thursday that it is the 1st time for BP to raise funds via hybrid bonds issue that is known to weigh only modestly on a company’s balance sheet as it does not require the principal to be repaid.

BP issued hybrid bonds only days after it estimated up to £13.95 billion of write-downs in the second quarter ascribed to the Coronavirus pandemic. The British company expects the health crisis to weigh significantly on the global energy demand and also speed up a shift towards renewable energy.

Much like its competitors, British Petroleum is expected to take a massive hit to its revenue due to an unprecedented plunge in the global demand for energy ascribed to the novel flu-like virus that has so far infected a little under 300,000 people in the United Kingdom and caused more than 42,000 deaths. The impairments, as per the London-headquartered company, are likely to fuel its debt burden in the upcoming months and may push it into slashing its dividend.

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BP to establish a global business service centre in Pune

In separate news, BP said on Thursday that it plans on expanding its footprint in India. The company hired roughly 2,000 workers in Pune to establish a global business service centre. The move contradicts its target of slashing its global workforce by 15% (approximately 10,000 jobs) as part of CEO Bernard Looney’s envisioned restructuring that aims at expanding BP’s focus on renewable energy in the upcoming years.

At the time of writing, the British multinational oil and gas company is valued at £63.21 billion.