AT A GLANCE: BP Shares Rise; Political Pressure Remains

10th Jun 2010 22:58

THE NEWS: Shares of BP PLC (BP, BP.LN) rose Thursday in the U.S., narrowing sharp losses incurred Wednesday, as fears eased about the U.K. oil giant's ability to withstand the expense of Gulf of Mexico oil spill. However, U.S. lawmakers continue to ratchet up the rhetoric that BP must stop the crude that has been spewing from the ruptured well since April 20--and pay for the cleanup. THE MARKET ACTION: U.S.-listed BP shares shot up after they hit a 14-year low in the previous session. The stock closed at $32.78, gaining 12.3%, as the broader equity indexes were up nearly 3.0%. The London-listed shares were down 11% Thursday, falling to a 13-year low before clawing back some of their losses. U.K. investors were especially spooked by criticism by U.S. officials that the oil giant should suspend its dividend until its oil spill liabilities are known. IN THE BOND MARKETS: Meanwhile, credit markets treated BP as if the Aa2-rated company held a bond rating near junk. The company's 5.25% bonds due 2013 traded for 93 cents on the dollar, yielding 7.627%, according to MarketAxess. That topped the 6.738% yield on Ford Motor Co.'s (F) 7.000% issue due 2013, which Moody's rates Ba3--10 notches below BP and well into junk territory. The cost of insuring debt issued by BP also eased after spiking in reaction to the share-price drop. The cost of insuring $10 million in debt for five years spiked to $557,000 early Thursday from late Wednesday's $368,000. It drifted down to $477,500 Thursday afternoon. THE DIVIDEND DEBATE: A Justice Department official said the U.S. isn't preparing to seek an injunction to block BP from paying dividends. However, the official added that the department hasn't ruled out seeking an injunction in the future. Meanwhile, U.K. Treasury chief George Osborne has offered that government's first sign of public support for the oil giant, saying it is "important to remember the economic value BP brings to people in Britain and America." In 2009, BP's payout comprised 14% of all dividends from FTSE 100 companies and is a very important source of income for U.K. pension funds. OTHER POLITICAL PRESSURE: White House spokesman Robert Gibbs was asked if the U.S. was worried about BP's falling stock prices in the face of increasingly tough rhetoric from the White House. Gibbs said he wouldn't address the company's obligations to its shareholders, but focus on BP's obligations in the oil spill. New U.K. Prime Minister David Cameron has kept a low profile on the oil spill, but will raise the topic on a call with President Barack Obama slated for Saturday. THE COLLECTION EFFORT: BP said it was able to collect 15,800 barrels of oil from the spill site Wednesday, adding it could boost that by 10,000 barrels a day within a week. However, any additional crude collected will be flared off. If 10,000 more barrels are gathered, about $740,000 of the commodity, at current prices, will go up in smoke. ESTIMATE OF HOW MUCH OIL IS BEING SPILLED: Meanwhile, the Washington Post reports a study by scientists commissioned by the U.S. government says the broken oil well has been gushing 25,000 to 30,000 barrels each day since its blowout April 20. BP & THE STATES: BP said it would provide $75 million in grants--to be evenly split by the states of Alabama, Florida and Mississippi--to help mitigate the impact of the spill. Later, Florida's attorney general asked BP to put at least $2.5 billion into an interest-earning escrow account to ensure money is available to cover potential losses. ALSO... "The legal onslaught versus BP PLC over the Gulf of Mexico oil spill is entering a new stage, with lawyers representing U.S. pension funds and other institutional investors lining up to sue the company's management and directors over the plunge in the value of their investments." -- from "BP Investors Target Management Over Losses Following Oil Spill" By Isabel Ordonez of Dow Jones Newswires WHAT THEY SAID: "There was a lot of fear in the market yesterday (Wednesday), and people maybe have slept on it and are getting a little less scared of the stock," said Raymond James analyst Alex Morris. "People might just be thinking that yesterday's sell-off was overblown and premature." "We estimate that BP shares currently discount $60 billion in potential liabilities, which we think is very unrealistic," said Fadel Gheit, an analyst at Oppenheimer & Co. "BP has been late to recognize the critical political sensitivity," said NCB Stockbrokers analyst Peter Hutton. "They need to act on this quickly in our view, to give the U.S. establishment enough room to claim progress without resorting to emergency legislation." Dow Jones Newswires' coverage includes: US-Listed BP Shares Rebound As Fears Over Spill Liability Ease Credit Markets Treat BP As If It Were Below Investment Grade BP Investors Target Management Over Losses Following Oil Spill BP's Trading Counterparties Don't Share Investors' Fears OPTIONS REPORT: Traders Prep For Swings In BP Stock DOJ Official:Not Preparing To Seek Injunction Blocking BP Dividends White House Spokesman Gibbs: Obama May Meet With BP Chairman WSJ: UK Treasury Chief Osborne Signals Government's First Support For BP US: Oil Spill Not Causing Tension With UK Study: BP Well Spewing 25,000 To 30,000 Barrels A Day -WP BP: It Collected 15,800 Barrels Of Oil On Wednesday BP: Will Be Able To Collect Extra 10,000 Bbl/Day Within Week BP Will Flare Off All Its Increased Capture Rate BP Provides $75M To 3 States To Fund Oil Leak Response Florida AG Seeks At Least $2.5B Escrow Account From BP Gulf Servicers Rise As BP Claws Back Some Of Wednesday's Fall WEALTH ADVISER: BP Now Seems Like Gamble To Financial Planners UK PM Cameron To Speak With US President Obama At Weekend WSJ: La. Wildlife Center In Battle To Save Oil-Soaked Birds WSJ/The Source: BP Takeover Talk Flounders In Oily Waters Manpower Sends Specialist Staff To Assist In Gulf Cleanup TAKING STOCK: What Does Obama Care For UK Pensioners? MARKET TALK: S&P Equity Research Downgrades BP To Hold Bristow Updates Impact From Gulf Drilling Moratorium For additional coverage, please search on the corporate code BP (END) Dow Jones Newswires June 10, 2010 17:58 ET (21:58 GMT)