Pacific E&P sees bond bids sink over skipped payments

Fri Jan 15, 2016 9:43am EST
 
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By Paul Kilby

NEW YORK, Jan 15 (IFR) - Bids on bonds issued by Pacific Exploration & Production sunk to as low as 8.125 cents on the dollar on Friday after the troubled LatAm oil company said it would not pay interest due this month.

The borrower is exercising a 30-day grace period on its 2019 and 2025 bonds after announcing it would not pay more than US$66m due in January.

It will skip the US$31.3m interest payment on its 5.625% 2025s due on January 19 as well as the US$34.9m due on the 5.375% 2019s on January 26.

"The company's current liquidity position is being impacted by the significantly depressed international oil prices," it said late Thursday.

"The company will use the grace period to engage with its creditors ... with a view to making its capital structure more suitable to current market conditions."

The bonds have seen few if any trades on Friday, but one trader spotted the 2019s at 8.125-15.000 cents on the dollar.

"It has got ugly quickly," he said. "People are trying to figure out where the bonds should be."

Pacific has already obtained covenant waivers on approximately US$1.4bn of loans from banks including Bank of America and HSBC, but they expire on February 26.   Continued...