UPDATE 1-Oil producer Pacific Rubiales denies rumors about debt default

Wed Jan 14, 2015 8:30pm EST
 
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(Recasts with market rumor on debt default)

By Tanvi Mehta

Jan 14 (Reuters) - Canadian oil and natural gas producer Pacific Rubiales Energy Corp denied market rumors regarding its debt obligations that briefly halted trading and sent shares to a five-year low on Wednesday.

"Contrary to market rumors, the company is not in default under any of its debt obligations and does not expect to be at risk of payment default," Chief Executive Officer Ronald Pantin said in a statement.

Shares of Pacific Rubiales, the biggest private oil producer in Colombia, were briefly halted during the day.

Trading resumed later and the company's shares fell to a five-year low of C$3.35 and closed at C$4.21.

An analyst report warned that the company might breach an incurrence test requiring the ratio between its consolidated debt and its earnings before interest, tax, depreciation and amortization (EBITDA) to be below 3.5:1.0. The company said the ratio was currently 1.8:1.0.

Traders said the company's bonds dropped 10 to 14 points as thin liquidity exacerbated moves and drove bid-offer spreads wider. The 5.625 percent 2025s traded at $55.50 to $56.50. The 5.125 percent 2023s traded at $52.50 to $54.

Earlier on Wednesday, the company joined Canadian oil and gas producers in cutting capital budgets, citing falling oil prices amid a supply glut and the OPEC's refusal to curb production.   Continued...