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Here's Why BP Taps Hybrid Bond Market for the First Time
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BP plc (BP - Free Report) has raised funds as high as $12 billion through the offering of hybrid bonds, per Financial Times. Notably, this British energy giant collected the amount at low interest rates.
The news source added that the money has been accumulated through the offering of five notes denominated in euros, dollars and pounds. Importantly, for some of the new notes that are offered in euro, BP has reportedly been able to lock its yearly interest rate payments at a low rate of 3.25%.
This is the first time that the energy major tapped the market for hybrid bond despite the coronavirus pandemic hurting global energy business. Investors should know that the hybrid bond offering a modest rate will strengthen BP’s balance sheet, thereby offsetting the concerns that the company’s recent asset write-downs will affect its financials.
BP recently estimated a write-off of up to $17.5 billion from its assets following the downward revision of its long-term oil and gas prices.
The company expects the ongoing pandemic crisis to persistently dent global energy demand. Also, management believes that post COVID-19, there will be a growing transition to low-carbon economy since investors are increasingly pressing oil companies to significantly curb carbon footprint, which is in line with the Paris climate goals.
To incorporate these impacts, BP trimmed its forecast for Brent oil price from $70 per barrel to $55 until 2050. The new price outlook convinced this integrated energy firm to include non-cash impairment charges and write-offs worth $13-$17.5 billion, after tax, in the second quarter. Analysts believe that the decrease in asset value will deteriorate BP’s debt-to-equity ratio, thereby weakening its balance sheet.
Murphy USA is likely to see earnings growth of 7% in the next five years.
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This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
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Here's Why BP Taps Hybrid Bond Market for the First Time
BP plc (BP - Free Report) has raised funds as high as $12 billion through the offering of hybrid bonds, per Financial Times. Notably, this British energy giant collected the amount at low interest rates.
The news source added that the money has been accumulated through the offering of five notes denominated in euros, dollars and pounds. Importantly, for some of the new notes that are offered in euro, BP has reportedly been able to lock its yearly interest rate payments at a low rate of 3.25%.
This is the first time that the energy major tapped the market for hybrid bond despite the coronavirus pandemic hurting global energy business. Investors should know that the hybrid bond offering a modest rate will strengthen BP’s balance sheet, thereby offsetting the concerns that the company’s recent asset write-downs will affect its financials.
BP recently estimated a write-off of up to $17.5 billion from its assets following the downward revision of its long-term oil and gas prices.
The company expects the ongoing pandemic crisis to persistently dent global energy demand. Also, management believes that post COVID-19, there will be a growing transition to low-carbon economy since investors are increasingly pressing oil companies to significantly curb carbon footprint, which is in line with the Paris climate goals.
To incorporate these impacts, BP trimmed its forecast for Brent oil price from $70 per barrel to $55 until 2050. The new price outlook convinced this integrated energy firm to include non-cash impairment charges and write-offs worth $13-$17.5 billion, after tax, in the second quarter. Analysts believe that the decrease in asset value will deteriorate BP’s debt-to-equity ratio, thereby weakening its balance sheet.
BP p.l.c. Price
BP p.l.c. price | BP p.l.c. Quote
Overall, with the issuance of hybrid bond for the first time, BP joined other energy giants like TOTAL S.A. and Repsol SA (REPYY - Free Report) . Currently, BP carries a Zacks Rank #3 (Hold). A better-ranked player in the energy sector is Murphy USA Inc (MUSA - Free Report) , which has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Murphy USA is likely to see earnings growth of 7% in the next five years.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
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