On Monday, ExxonMobil raised $9.5 billion in new debt, with the most significant U.S. oil producer seeking to strengthen its funds while debt markets stay still welcome new offers.
Exxon now paid a relatively lower price to borrow than it did in a similar debt offer four weeks ago. This is an indication of how investor confidence is gradually returning after a slump in energy prices and a stock market plunge triggered by the coronavirus pandemic.
Exxon made $9.5 billion by selling five different bonds with more duration starting from half a decade to more than three decades, which it had already planned to raise, indicating sturdy investor demand.
In an example of how the firm’s borrowing costs have dipped in recent weeks, it priced a 10.5-year bond worth $2 billion at a 185 basis-point premium to Treasuries with a 2.61% yield.
In August 2019, Exxon had received $1.25 billion through a decade long bond with a premium to Treasuries of 75 basis points and a yield of 2.44%.
In March, Exxon issued $2 billion in debt with a decade long interval where the premium to Treasuries was 240 basis points, and the yield was around 3.50%.
The new raise by Exxon comes as highly rated U.S. corporations have been betting on debt markets for cash flow at a record clip, stocking up on cash because of the uncertainty encircling the economic impact from coronavirus.