S&P assigns BBB to BP notes

S&P said it assigned its BBB long-term issue rating to the planned perpetual subordinated non-call 9.75-year fixed-rate reset notes to be issued by BP Capital Markets plc. The issuer is the finance subsidiary of BP plc, which will guarantee the notes on a subordinated basis. The final terms, including the total amount, are subject to market conditions.

The two-notch difference between the BBB rating on the securities and the A- issuer credit rating on BP reflects a notch for subordination and another for payment flexibility due to the optional deferability of interest, S&P said.

“The notching reflects our view that the issuer is relatively unlikely to defer interest. Should our view change, we may increase the number of notches we deduct from the ICR to derive the issue rating,” S&P said in a press release.

BP will use the proceeds to refinance some of its outstanding hybrid instruments, leaving the group's total amount of hybrid capital unchanged.

The outlook is positive.

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