Why the Santos (ASX:STO) share price is on the move today

The Santos (ASX: STO) share price is up and down following an update on the company’s bonds offer. We take a look at what was announced.

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The Santos Ltd (ASX: STO) share price is in seesawing during midday trade. This comes after the company provided an update on its bonds offer.

At the time of writing, the energy producer’s shares are swapping hands for $6.93, up 0.14%. However, during morning trade, Santos shares have swung several times from red to green. 

Quick take on Santos

Founded in 1954, Santos produces natural gas and oil, with operations across Australia, Timor-Leste and Papua New Guinea. The company is recognised as Australia’s largest domestic natural gas supplier, catering to over 20% of the country’s needs.

Bonds offer

Investors appear divided over the company’s latest update, sending Santos shares up and down in the day’s trade so far.

According to its release, Santos has placed a US$1 billion price tag on its senior unsecured fixed-rate bond transaction. The bonds will be issued by wholly-owned subsidiary, Santos Finance and guaranteed by Santos.

The company stated that the bonds will have a fixed coupon rate of 3.649% for a period of 10 years. The maturity date for the bonds will occur in April 2031.

Subject to customary closing conditions, settlement of the bonds is expected to be completed on 30 April 2021.

Santos managing director and CEO Kevin Gallagher welcomed the news, saying:

This is an excellent result for Santos’ debut 144A issuance, showing strong support from the capital markets and ensures our balance sheet is well positioned to support our disciplined growth strategy.

Santos’ disciplined operating model is focussed on maintaining a strong balance sheet and generating free cash flow through improvements in productivity and maintaining discipline in capital expenditure through the cycle.

Santos share price snapshot

The Santos share price has gained over 60% in the past year and is up around 8% year to date. The company’s shares hit a recent 52-week high of $7.80 last month, but have since headed lower.

Santos has a market capitalisation of about $14.4 billion, with a tad more than 2 billion shares outstanding.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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