With oil prices continuing to hover at extremely low levels, ExxonMobil (NYSE:XOM) has taken more action to shore up its finances.
The energy giant on Monday raised $9.5 billion by selling five new bond issues with maturities ranging from five to 31 years, according to a Reuters report. The article noted that ExxonMobil had originally planned to raise $9 billion through the offering; the higher capital raise indicates that demand was strong for the bond issue.
Last week, ExxonMobil announced it would cut its 2020 capital spending by 30% and would reduce its operating expenses by 15%. All of these moves were made in response to conditions of heavy oversupply in the oil market -- a situation caused both by the steep plunge in demand due to the COVID-19 pandemic and by producers pumping a glut of crude.
The cost of money
Though ExxonMobil is paying more to borrow than it did prior to the pandemic, the Reuters article noted that the bond rates for this issue are lower than they were for bonds the company sold approximately four weeks ago. This is a sign that investor confidence is improving after a period of high volatility in the equity and energy markets.
In announcing the company's operational cutbacks last week, Chairman and CEO Darren Woods said the moves were meant to improve ExxonMobil's financial position until markets rebound, and to "preserve cash for the dividend and make appropriate and prudent use of our balance sheet."
The new debt deal was to further improve its cash position, particularly while the debt market is receptive to new issuers, according to the report.