On Monday, ExxonMobil Corp managed to raise $9.5 billion through bond issuance. The new debt came in five different bonds with maturity ranging from 5 to 31 years. Exxon initially planned to raise $9 billion but increased by $0.5 billion reportedly due to robust investor demand.
The largest US oil producer paid a lower cost to borrow than its previous debt issued four weeks ago. This reflects returning investors’ confidence after the collapse of energy prices. However, the cost remains higher than before the COVID-19 pandemic. The company priced its $2 billion debt with 10.5-year duration at a 185 bps premium to US Treasuries yield of 2.61%. On March 17, Exxon sold a 10-year bond worth $2 billion with 240 bps premium to US Treasuries yield of 3.482%.
Exxon’s shares have been under heavy pressure in 2020 due to the crash in oil prices. Its share price has been down 38.7% so far in 2020, compared to a 14.5% fall in the S&P 500 Index. Oil prices were mixed on Monday, signalling that the largest-ever supply cuts may not be enough to boost prices.
US companies are expected to continue stocking up on cash further as long as the market is still open to new debt issuers. General Electric Co, Cinemark Holdings Inc, and Walgreens Boots Alliance Inc also issued new debt on Monday.
