Exxon Mobil Steps Up With Debt Offering and New Investments

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Source: http://www.flickr.com/photos/ollesvensson/

Source: http://www.flickr.com/photos/ollesvensson/

On Monday, U.S. oil and gas supermajor Exxon Mobil (NYSE:XOM) revealed a $5.5 billion bond offering, breaking a 20-year debt market dry spell. The offer is broken into two floating rate notes due 2017 (at three-month LIBOR plus 0.04 percent) and 2019 (at three-month LIBOR plus 0.15 percent), as well as three fixed-rate notes due 2017 (at 0.921 percent), 2019 (at 1.819 percent), and 2024 (at 3.176 percent).

The offering does little to disturb Exxon Mobil’s relatively healthy debt situation. The bonds to the company’s existing debt pool of $22.7 billion gave Exxon Mobil a debt-to-equity ratio of 12.58 last quarter. This is below its major U.S. competitor Chevron (NYSE:CVX) at 13.58 and well below the beleaguered BP (NYSE:BP) at 36.96. Exxon Mobil carries an AAA rating from both Moody’s and Standard & Poor’s.

After deducting underwriting discounts and commissions – HSBC (NYSE:HSBC), JPMorgan Chase (NYSE:JPM), and Morgan Stanley (NYSE:MS) took point on the deal, along with more than a dozen other financial institutions — Exxon Mobil expects to net $5.486 billion in proceeds from the sale. The company provided boiler-plate language about usage, saying that it intends “to use the net proceeds from the sale of the Notes for general corporate purposes, including, but not limited to, funding for working capital, acquisitions, capital expenditures, refinancing a portion of our existing commercial paper borrowings and other business opportunities.” The company added that as of February 28, its commercial paper had an average interest rate of 0.07 percent.

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