BP Capital Markets pulls in guidance on dollar bond

(Adds comparables)

By Danielle Robinson

NEW YORK, Feb 10 (IFR) - BP Capital Markets was able to tighten its official guidance on a four-part US dollar benchmark bond this morning by 15bp from initial price thoughts, as investors moved back into top quality energy names.

The offering of two, three and five-year fixed and floating rate notes, is the first opportunity this year for investors to buy a blue chip major's bonds in bulk, at a time when oil prices are showing signs of recovery.

In the past week the WTI crude price has gone from US$47.00 a barrel to US$52.00, a rebound which has fueled a rally in the best quality energy bonds that were indiscriminately dumped during the worst of the oil price decline in January.

Although some commodity strategists warn that oil could still suffer further declines in price, investors are anxious not to miss out on bargains that could make their year's performance.

"The deciding factor on how well you do as an investor this year will be determined by the outcome of energy," said Scott Kimball, senior portfolio manager at Taplin Canida and Habacht.

"You cannot ignore the most beaten up sector in the market, because if you do, then you could miss out on some very nice yields and tightening up on spread as the market realizes that many high grade companies have been dramatically oversold."

On Monday MPLX, Marathon Petroleum Corp's MLP (Xetra: 656990 - news) , attracted US$4.2bn of demand for a US$500m 10-year bond offering.

BP has put guidance of 70bp area on its three-year fixed rate note, plus or minus 5bp, from 85bp initial price thoughts, and 85bp area on the five-year from 100bp whispers.

It is also offering a two-year FRN, talked at 40bp over three-month Libor from IPTs of 50-55bp.

At official guidance the five-year tranche offers about 7-12bp of new issue concession, versus its outstanding 2.521% January 2020s, which were quoted at a Treasury curve-adjusted 'G' spread of 73bp pre-announcement.

BP's 2020s have rallied 10bp since last Tuesday and about 20bp since mid December.

Active bookrunners on the deal are Credit Agricole, Goldman Sachs, Mizuho and RBS (LSE: RBS.L - news) .

(Reporting by IFR reporters; Writing by Natalie Harrison; Editing by Shankar Ramakrishnan)