Oxy begins bond sale to fund Anadarko deal

August 06, 2019

NEW YORK (Bloomberg) - 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.

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.

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