The Bonds of Royal Dutch Shell

The Bond market is almost twice as large as the stock market, making it the 2nd largest market after the foreign exchange market.

Shell is one of the largest energy companies in the world. It is Anglo-Dutch, and is the largest company by market capitalisation on the FTSE-100, it is about 7% of the FTSE-100.

It is an active player in the bond market (debt), with a very large issuance programme, as with such stable cash flows, is able to borrow huge quantities of cash on the bond market to fund its day to day activities, and reward its lenders with safe and stable returns.

But how large are the borrowings of Royal Dutch Shell ?
[http://www.shell.com/global/aboutshell/investor/financial-information/bonds-and-credit-rating.html#textwithimage_2]

Lists all the debt issued (money borrowed by Shell from Bond investors)

When you add this list of 23 issued bonds, convert into Dollars it comes to $32,158 million = $32 Billion = £19,338 Million = £19.3 Billion.

Doing a rough estimate on the average interest rate (coupon), that comes to 3.66%. So in these low interest rates, where money is lucky to get 1% on deposit, lending to Shell gets you an average of 3.66%, and even higher if the money is lent over a longer period.

A company whose borrowings are absolutely tiny, when it comes to the actual turnover of the business,
[http://reports.shell.com/annual-review/2012/servicepages/downloads/files/entire_shell_review_12.pdf]

The numbers are staggering:
Capital Investment in 2012: £17,922 million = £17.9 Billion
Revenue in 2012 = £255,223 million = £255 Billion
Shareholder Dividends in 2012 = £6.6 Billion

3 largest shareholders:

BlackRock, Inc.  5.63%
Legal & General Group plc  3.10%
The Capital Group Companies 5.01%

The Anglo Dutch Energy and Cash Generating Giant.

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