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ConocoPhillips spinoff Phillips 66 to start with $8 billion of debt
By Lisa Kerner
Charlotte, N.C., April 9 - ConocoPhillips held its first analyst update for Phillips 66, the downstream company ConocoPhillips previously announced it will spin off as of May 1.
Phillips 66 has issued $8 billion of "very affordable debt" at an average all-in interest rate of 3.5%, designated chairman and chief executive office Greg Garland during the call on Monday.
At May 1, Phillips 66 will begin with a BBB rating from Standard & Poor's and a Baa1 rating from Moody's Investors Service.
The company's initial debt to capitalization ratio is a little over 30%, and the company's target range is 20% to 30%, Garland said.
Despite the volatility of the business and an expectation that cash flows will remain volatile, Garland said he expects Phillips 66 to generate sufficient cash to fund its sustaining capital needs and its distributions.
Phillips 66 is committed to differential shareholder value and portfolio optimization, which includes using excess cash for share repurchases and deploying capital to higher-return businesses, Garland said.
ConocoPhillips in an integrated energy company. After the spinoff, ConocoPhillips will be an oil and natural gas exploration and production company, and Phillips 66 will be a downstream energy company. Both will be based in Houston.
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