BP Is Trying to Raise $50 Billion to Cover Oil Spill Cleanup Costs

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BP is trying to raise money to cover the cost of the oil spill cleanupBP (BP) will try to raise a total of $50 billion to cover the costs of the Deepwater Horizon spill. According toThe Times of London, this "secret plan" is to bring in "more than twice the amount previously disclosed."

Of this amount $20 billion would come from asset sales, $20 billion from bank loans and $10 billion from bonds.

It's difficult to see how the UK-based oil firm will accomplish this. On June 18, Moody's Investors Service cut BP's rating to A2, down three notches. This means that BP will have to pay a very high interest rate on any money that it borrows or raises.

Wary of BP's Long-Term Liability

Investors and banks will be wary of BP's potential long-term liabilities due to the spill. Several legal experts say that the costs of the cleanup and lawsuits from states, businesses, and individuals could reach well into the tens of billions of dollars.

A week ago, BP said its costs for the cleanup so far have hit $1.4 billion and that the total is expected to be $3 billion to $6 billion. If the spill moves well down the Florida shore toward the Keys or into the Atlantic Ocean, those expenses could go much higher.

It's impossible to tell what assets BP will sell, but potential buyers may use the oil company's troubles as a way to push down bids.
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