Credit Markets React Positively To BP's $20B Spill Fund News

17th Jun 2010 09:01

LONDON (Dow Jones)--Credit markets reacted positively to the news that BP PLC (BP.LN) will set aside $20 billion to cover claims relating to its oil spill in the Gulf of Mexico, with the cost of insuring the company's bonds falling sharply early Thursday. The annual cost of insuring $10 million of debt fell to $450,000, around $96,000 lower than at Wednesday's close, according to data provider Markit. "Although the $20 billion Escrow account that is funded this year with ring-fenced U.S. assets and curtailed first quarter-third quarter dividends does not cap BP's liabilities, it gives some clarity to the profile of cash outflows at the group," says RBC's Miriam Hehir. She also points out that BP has said it hopes the fund arrangement will reinforce its AA ratings with S&P and Moody's. Fitch Ratings recently cut its credit rating on BP to BBB. -By Michael Wilson, Dow Jones Newswires; 44 20 7842 9349, [email protected] (END) Dow Jones Newswires June 17, 2010 04:01 ET (08:01 GMT)