Exxon Mobil Corp on Monday raised US$ 9.5 billion in new debt, with the largest U.S. oil producer seeking to bolster its finances while debt markets remain open to new deals.
Exxon paid a lower price to borrow than it did in a similar debt deal almost four weeks ago, a sign of how investor confidence is gradually returning after a rout in energy prices and a stock market collapse fueled by the coronavirus outbreak.
Nevertheless, borrowing costs for Exxon were still higher than prior to the coronavirus outbreak.
Exxon raised US$ 9.5 billion by selling five different bonds with a variety of durations ranging from five years to 31 years, up from US$ 9 billion which it had originally planned to raise, indicating robust investor demand.
In an example of how the company’s borrowing costs have come down in recent weeks, it priced a 10.5-year bond worth US$ 2 billion at a 185 basis-point premium to U.S. Treasuries with a 2.61% yield. On March 17, Exxon sold US$ 2 billion in debt with a 10-year duration where the premium to U.S. Treasuries was 240 basis points and the yield was 3.482%.
In August last year, Exxon raised US$ 1.25 billion through a 10-year bond with a premium to U.S. Treasuries of just 75 basis points and a yield of 2.44%.
The new issue by Exxon comes as highly rated U.S. companies have been tapping debt markets for cash at a record clip, stocking up on cash due to the uncertainty surrounding the economic impact from coronavirus.
Exxon’s stock has been hammered this year by the collapse in oil prices, with its share price down 38.7% so far in 2020, a steeper fall than the 14.5% drop in the benchmark S&P 500 Index.
In a regulatory filing, Exxon said it planned to use the proceeds for “general corporate purposes.”