What's wrong with EnQuest bonds?
Discussion
Never actually invested in bonds so not sure if I'm missing something but EnQuest bonds look like reasonable value to me. Trading at about 90p with a 5.5% coupon, which gives a 7% yield, and mature in 2022.
http://www.fixedincomeinvestor.co.uk/x/bondchart.h...
Why have they dropped off a cliff recently? As far as I know EnQuest is fairly stable with producing assets. I guess the shares will have been hammered by the oil price drop but doesn't seem to be in any danger of going under. Or is it?
I know that bond prices will probably fall if/when interest rates rise, but if you're prepared to stay in until maturity it looks like a pretty good bet.
What am I missing?
http://www.fixedincomeinvestor.co.uk/x/bondchart.h...
Why have they dropped off a cliff recently? As far as I know EnQuest is fairly stable with producing assets. I guess the shares will have been hammered by the oil price drop but doesn't seem to be in any danger of going under. Or is it?
I know that bond prices will probably fall if/when interest rates rise, but if you're prepared to stay in until maturity it looks like a pretty good bet.
What am I missing?
Its likely the economic returns are being cut heavily with the drop in the price of oil.
Im not sure what their cost of production per barrel is but with the recent 20% cut in price they are likely to be under some pressure if not ultimately uneconomic.
Therefore their ability to maintain bond repayments is also under pressure etc..
Im not sure what their cost of production per barrel is but with the recent 20% cut in price they are likely to be under some pressure if not ultimately uneconomic.
Therefore their ability to maintain bond repayments is also under pressure etc..
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