CDS On BP, Oil-Spill Companies Rally On Divestiture Talks

12th Jul 2010 15:00

By Katy Burne Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The cost of protecting BP PLC's (BP, BP.LN) debt fell sharply Monday amid reports that the U.K. oil giant is in talks to sell more than $10 billion of assets to exploration and production company Apache Corp. (APA), and separately that ExxonMobil (XOM) may offer to buy BP. Insurance on BP debt, in the form of credit default swaps, was quoted as of 9 a.m. EDT at 325 basis points, equivalent to $325,000 annually to cover $10 million of bonds for five years. That was 11% lower than where it closed Friday night, according to CMA DataVision. CDS on other companies involved in the Gulf of Mexico oil leak improved in line with BP's rally. The cost to insure debt issued by Anadarko Petroleum Corp. (APC) fell 5.7% from Friday to 490 basis points; Transocean Ltd.'s (RIG) fell 4.1% to 470 basis points; and the cost to insure Halliburton Co. fell 2.32% to 475 basis points. BP said in a statement the cost of its response to the spill so far amounts to approximately $3.5 billion, including containment, relief-well drilling, grants to Gulf states, claims and other expenses. It is in the process of replacing a cap on the site's blowout preventer, which it is hoped could contain the leak faster than expected. BP's 3.875% bond due March 2015 was the most actively traded early Monday, priced at 92.65 to yield 5.694%, down from 5.862% Friday, according to MarketAxess. Meanwhile, Anadarko's most actively traded bond, which matures in March 2014, was priced at 102.5 to yield 6.838%, down from 7.226% Friday. -By Katy Burne, Dow Jones Newswires; 212-416-3084; [email protected] (END) Dow Jones Newswires July 12, 2010 10:00 ET (14:00 GMT)