BP Weighs Selling Bonds to Chinese Investors to Meet Gulf Oil-Spill Costs


BP Plc, which is facing a bill for as much as $40 billion for the Gulf of Mexico oil spill, is considering selling bonds aimed at Chinese investors as it diversifies its funding sources.

BP may issue debt in yuan as well as yen and Australian and Canadian dollars, according to Gary Admans, the London-based company’s manager of debt capital markets. He was speaking at Euromoney’s Corporate Financing Forum 2010 in Paris today.

The company has sold bonds in the Japanese and Australian currencies before, the most recent being an A$325 million ($433 million) issue of 6 percent five-year notes on March 3, according to data compiled by Bloomberg. BP last issued debt in October, with a 1 billion-euro sale of 3.83 percent notes due in 2017.

BP is selling assets to meet the costs of the crude oil spill at its Macondo well on April 20, which cost Chief Executive Officer Tony Hayward his job. The company agreed last month to sell its 60 percent interest in Pan American Energy to Argentinean oil and gas company Bridas Corp. for $7.06 billion, taking its asset sales this year to about $21 billion.

BP rose to the highest since May 28 today, climbing as much as 2.4 percent to 461 pence in London. The stock is still down 30 percent since the accident.

The cost of protecting BP’s debt using credit-default swaps surged more than 13-fold in the wake of the crisis and is now about twice as high as at the time of the accident, at 97 basis points, according to CMA.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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