Morning Commentary: Pacific Rubiales bonds in free-fall after takeover bid dropped; China eyed

By Christine Van Dusen

Atlanta, July 9 – Latin America-focused Pacific Rubiales Energy Corp. remained on radar screens on Thursday morning, with its bonds plummeting as much as 12 points after Wednesday’s news that Mexico’s Alfa SAB de CV and Harbour Energy Ltd. were withdrawing their takeover bid.

Alfa and Harbour Energy pulled out of the deal – an offer of $5.11 per share, valued at about $1.7 billion – because they were unwilling to increase the bid, even after seeing that a large number of shareholders believed it was far too low.

“This is particularly negative news for Pacific Rubiales bondholders, as the company’s high level of debt and current oil price dynamic will negatively affect its operations,” according to a report from Schildershoven Finance BV. “We warn investors that the risks of investing in the company are high and recommend avoiding it.”

In other news on Thursday morning, Asian bonds were “very active,” led by “extreme moves” in Chinese equity markets, a London-based trader said.

This followed major losses on Wednesday, after some firms halted trading to stem selling and the police investigated short-selling.

“Opened with a very grim tone,” he said. “Chinese financials were 4 basis points to 5 bps wider and are now largely back to unchanged, even 1 bp to 2 bps tighter in some names.”

Other corporates from China were down as much as 10 bps at the open but bounced back to widen about 3 bps on the day, he said.

“Good two-way flows in the Korea space,” he said. “Philippines has been rock-solid, with the long end opening unchanged and rallying a ½-point.”

Indonesia, however, opened soft on the bid amid poor liquidity, but “looked to be around ¼-point lower to begin with,” he said.

“Once China found its footing and exploded higher, Indonesia also caught a bid,” he said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.