Photographer: Eddie Seal/Bloomberg

Exxon Mobil Raises $8 Billion in Its Largest Bond Offering

Exxon Mobil Corp. sold $8 billion of debt in its biggest bond offering ever and the largest energy-related deal since the plunge in crude prices that began in July.

The world’s largest oil company by market value boosted the deal by about 14 percent after previously marketing $7 billion of debt, according to a person with knowledge of the transaction who asked not to be identified citing lack of authorization to speak publicly. Irving, Texas-based Exxon issued the securities as a combination of fixed- and floating-rate notes in the seven-part sale.

Exxon holds top triple-A credit ratings from Moody’s Investors Service and Standard & Poor’s, making it one of only three U.S. corporations -- Johnson & Johnson and Microsoft Corp. are the others -- that stand on nearly equal footing with governments in debt markets. Investors are hungry for the high-quality bonds, as they offer higher yields than sovereign debt.

“There’s tremendous appetite from the investor community to buy high-value corporate names like Exxon and Chevron,” said Dan Heckman, a senior fixed-income strategist at U.S. Bank Wealth Management in Kansas City, Missouri. “People are always trying to seek out the cream of the crop.”

The largest portion of Exxon securities sold was $1.75 billion of 10-year, 2.709 percent notes at a yield of 0.58 percentage points more than comparable Treasuries, according to data compiled by Bloomberg. The securities climbed to as high as 100.3 cents on the dollar in trading after the sale Tuesday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

‘War Chest’

Exxon sold $1 billion of 10-year, 3.176 percent bonds priced to yield 48 basis points more than similar-maturity Treasuries in March 2014, Bloomberg data show. Those securities traded Monday at 105.27 cents on the dollar to yield 2.521 percent.

The new debt sale was probably motivated by the low cost of borrowing and a desire to be prepared for what lies ahead, according to Heckman.

“There’s good demand, spreads are still reasonable, and I think it is an insurance policy as well, in case spreads widen down the road or the company needs a war chest for acquisitions,” he said.

While the 50 percent drop in crude oil prices since June will hurt international energy companies, Exxon remains in a better position than most to weather the downturn, Moody’s said in a report on Tuesday.

Proceeds from the bond sale may be used to fund general corporate purposes, including acquisitions, capital expenditures and refinancing, according to the person with knowledge of the deal.

(An earlier version of the story corrected the spelling of the company’s name in the headline.)

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