Pacific bonds swing on takeover denials, buyback

Thu Jan 14, 2016 3:28pm EST
 
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By Paul Kilby

NEW YORK, Jan 14 (IFR) - Bonds issued by Pacific Exploration & Production suffered a volatile session on Thursday as prices swung on takeover talk that was denied by the troubled LatAm oil company.

Harbour's announcement that it would offer to buy some US$4bn of notes took bonds off their lows early in the session after prices reached around 10 cents on the dollar on Wednesday.

By early afternoon Thursday, however, the bond prices were giving back some gains and trading in the 13-16 range after Pacific announced in a Colombian regulatory filing that it had no knowledge of a takeover offer.

Either way, analysts expressed ambivalence about a deal that some thought came below recovery values.

Harbour Energy, which last year made a failed bid for Pacific, effectively offered to buy back the vast majority of its US$5bn debt load - though at a steep discount.

"We are offering to inject substantial capital by acquiring the senior notes of the company and sponsor an overall reorganization," Harbour Energy said in a statement.

The company, formerly known as Pacific Rubiales, has been struggling since the dramatic collapse in crude prices.

"It is a common perception that the company won't be able to fulfill its obligation under the current market conditions," said Klaus Spielkamp, a head of fixed-income sales at Bulltick.   Continued...