Pacific Rubiales bonds jump on takeover announcement

Thu May 21, 2015 12:56pm EDT
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By Paul Kilby

NEW YORK, May 21 (IFR) - Bond markets were showing support on Thursday for Mexican conglomerate Alfa and Harbour Energy's definitive decision to acquire embattled oil company Pacific Rubiales.

The announcement late Wednesday of a firm deal, which still requires 66% shareholder approval, lifted Pacific Rubiales's 5.625% 2025 bonds to 86.00, up from 83.50 on May 14.

The relief rally comes after considerable price swings this month. The bonds first rose on May 6 on news of a possible Alfa purchase only to sink later on poor results and attempts by a group of holdout investors to accumulate a larger position in the company.

"Given the bond market's reaction (today), risks for Pacific Rubiales have declined," said Alexis Panton, head of Latin America corporate strategy at Jefferies.

"While they are not being guaranteed by Alfa, bondholders can take comfort from its solid sponsorship."

A shareholders' meeting to vote on the acquisition is expected to be held in early July and the deal could close by the third quarter of 2015, Pacific Rubiales said Thursday.

It is by no means a done deal and that may be the reason why the bonds are still slightly south of the 86.00-88.00 levels reached on May 6.