Duff and Phelps put the outstanding fixed income securities of of Standard Oil Co on its watch list following the tentative offer by British Petroleum of North America &lt;BP> to buy the company. Standard Oils nearly three billion dlrs of long-term debt is currently rated DP-5 (high A) by the ratings agency. British Petroleum currently owns about 55 pct of Standard Oils outstanding common stock and to acquire the remainder at the tender offer price of 70 dlrs per share would cost 7.4 billion dlrs. British Petroleum intends to fund two-thirds of that purchase with borrowed funds and the rest with cash. The additional debt will raise the fixed obligation ratio of British Petroleum from under 30 pct to perhaps 45 pct and increase its debt service requirements Duff and Phelps said. However putting Standard Oils debt on its watch list which Duff and Phelps said had potentially negative implications may eventually result in an upgrade depending on how British Petroleum restructures the company Howard Mount of the ratings agency said. Mount said that acquiring Standard Oils substantial cash flows and eliminating the annual dividend which totaled 305 mln dlrs to common shareholders in 1986 would help satisfy British Petroleums higher debt service.
DUFF/PHELPS PUTS STANDARD OIL<SRD> ON WATCH LIST