Oxy Begins Bond Sale to Fund Anadarko Deal

Graphic for News Item: Oxy Begins Bond Sale to Fund Anadarko Deal

Occidental Petroleum is selling bonds to help finance its $38 billion acquisition of Anadarko, as debt issuers show faith in Tuesday’s market rebound.

Occidental is selling bonds in as many as 10 parts, according to a person with knowledge of the matter. The longest portion of the offering, a 30-year security, may yield 2.7 percentage points above Treasuries, said the person, who asked not to be identified as the details are private.

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The bond sale, expected to be in the $11 billion to $13 billion range, comes after Houston-based Occidental won the battle for Anadarko assets in oil industry’s biggest deal in at least four years. Chevron Corp. elected not to sweeten its $33 billion offer for Anadarko, walking away with $1 billion breakup fee in May.

The acquisition adds over $40 billion of debt to Occidental’s capital structure at its outset, a significant increase that leaves the company “with less flexibility to confront commodity price volatility,” Andrew Brooks, Moody’s Investors Service vice president, wrote in a statement last week. The rating company downgraded Occidental’s senior unsecured rating three notches to Baa3.

Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. are managing the bond sale, the person said.

Source: www.worldoil.com

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