UPDATE 1-BP shares hit 14-yr low, CDS widen on funding concerns
Fri Jun 25, 2010 5:33am EDTStocks
BP Plc
BP.L
301.75p
-23.50-7.23%11:20am UTC+0200
* Traders also cite weather concerns
* Shares down 7 percent
* 5-yr CDS widen 19 basis points
(Adds broker comment, detail)
LONDON, June 25 (Reuters) - Shares in BP (BP.L) fell as much as 7.5 percent, hitting a 14-year low on Friday morning, with traders citing investor concerns the oil major may need to raise cash to cover costs on the Gulf of Mexico spill.
BP is continuing its battle to clean up and contain the oil spill, which threatens an ecological and environmental catastrophe in the U.S. Gulf, as bad weather looms.
The company said on Friday it had so far spent $2.35 billion on the response effort to the oil leak. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For the latest on the oil spill, click on [ID:nN24227778] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Nomura said in a note that equity-linked financing could be the attractive short-term solution for BP to help cover the costs.
"A heavy inversion of both credit yield and equity volatility suggests the market is concerned about a near-term credit event around BP," it said in a note.
The broker said pressure was mounting on the oil major to improve its liquidity position to "assure sufficient fund to cap the well and meet "fat tail" scenarios around near-term expenses."
"With debt expensive and asset sales taking time, we consider that equity-linked financing -- perhaps backed by Sovereign Wealth as a show of support -- could prove the attractive short-term solution," it added.
Five-year BP credit default swaps, an insurance-like instrument against debt default, widened 19 basis points to 555 basis points, CDS monitor Markit said.
BP shares were down 7 percent at 0916 GMT.
Traders also cited concerns over looming bad weather, which could hamper BP's efforts to clean up the spill.
A tropical wave over the western Caribbean Sea has a high chance of developing into a tropical depression over the next couple of days, the U.S. National Hurricane Center and other weather forecasters said. [nN24131749]
(Reporting by Dominic Lau, Jane Merriman, Tricia Wright and David Brett; Editing by Hans Peters)
de koeweit's gaan kopen? emissie op 1 pond ? de arabieren kopen in een klap 40% van bp op ?