BP to sell inaugural Australian dollar bonds

City A.M. Reporter
British oil company BP is looking to sell an inaugural Australian dollar bond issue in a rare "kangaroo" offer, bringing a fresh industrial face to a market crowded with financial and sovereign borrowers.

Kangaroo bonds refer to Australian dollar bonds sold by international issuers in Australia. Offshore borrowers have been historically reluctant to raise Australian dollar funds because of the limited scale of the nation's bond market.

The five-year kangaroo issue, due to price later on today, is expected to fetch around A$500m (£328m), according to a source who has seen the deal's terms. It will likely pay a margin of around 115 basis points over the Australian bank bill rate.

Greg Stock, a portfolio manager at Perpetual Investments, which manages A$4.5bn in fixed income assets, welcomed the offer.

"It's a global household name and it is very good to see diversification in Australia," he said, adding the issue margin was around fair.

The offer, to be issued by BP Capital Markets, joins a selective club of non-bank/non-government kangaroo borrowers. British telecom company Vodafone is the only other international corporate issuer that has tapped the A$367bn Australian bond market.