Oil and gas companies worldwide have borrowed a total of $83.3 billion already this year, due to BP's (NYSE:BP) oil spill disaster. This is a 41 percent increase from this time last year. The bulk of it, $53.3 billion has come in the second quarter. Traders and analysts are saying that oil companies are increasing their borrowing. This is in order to lock down funding to prevent further turmoil in the credit market and the industry as a whole.
Energy companies are also feeling the effects and worldwide have sold a total of $29.1 billion in bonds since April 20th when BP's leased rig blew up. On Monday, Royal Dutch Shell sold a total of $2.75 billion in bonds. Shell had no comment as to why or on the timing of their sale.
Andrew Karp, head of investment grade bond syndicate at the Bank of America Merrill Lynch, said that there was a high demand for the debt sales. According to Standard & Poors 500 the oil and gas sector credit spread has increased from 2.43 percent on April 28th to on Thursday reaching 3,35 percentage points.
This normally would put off borrowers until costs came down. Oil companies are borrowing while they can. Justin D'Ercole, head of America's Investment grade syndicate at the Barclays Capital said, "in late July if there's noise that the relief wells aren't working, the energy space could be a lot wider and oil companies will likely try to get ahead of that."
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