12 Billion Debt Case Study: Exxon
However, Exxon’s $12 billion bond issue is expected to increase its overall accumulated debt (Rey 2016). According to CEO Rex Tillerson, raising debt to counter depressed prices could potentially damage the company’s value (Erman and Renshaw 2016). Moreover, the aforementioned cyclical slowdown in China exert pressure on the company’s financials. ‘Bloated’ sectors such as the steel industry are cutting capacity resulting in reduced energy needs (Home 2016). Coupled with the recent lifting of energy sanctions in Iran and Saudi Arabia’s refusal to ‘freeze’ supply, the World Bank forecasts higher inventories and prices to plunge to $10 per barrel in the coming months (TT 2016, Smith 2016). Consequently, instead of the envisioned 3% growth, Exxon