KrisEnergy bonds fall below 80 cents amid debt covenant pressure

KrisEnergy bonds are showing strain as the industry slump could put its debt covenants to the test, as distress in the local-currency debt market spreads.
KrisEnergy bonds are showing strain as the industry slump could put its debt covenants to the test, as distress in the local-currency debt market spreads.PHOTO: KRISENERGY LTD

SINGAPORE (BLOOMBERG) - KrisEnergy bonds are showing strain as the Singapore-listed oil and gas producer said the industry slump could put its debt covenants to the test, as distress in the local-currency debt market spreads.

The company's S$130 million of June 2017 notes were at 79.95 cents on the dollar yielding 37 per cent as of 11:24 am local time, based on indicative bids compiled by iFast Corp, which operates a retail and wholesale bond portal. Investors traded the 2017 notes at 89.55 cents on July 28, its data show.

KrisEnergy said on Sunday (Aug 14) that it's exploring equity issuance, refinancing and asset sales to strengthen its capital structure as debt covenants may come under stress after energy prices crashed in the past two years.

Swiber Holdings, a Sigapore-listed offshore oil and gas services firm, was put under interim judicial management earlier this month.

Shares of KrisEnergy were down 4 per cent at 11.9 Singapre cents as at 1:48 pm. The SGX Oil & Gas sub-index of 23 stocks, which include Swiber and KrisEnergy, has dropped 44 per cent since March 31.

"It will have a knock-on effect on the weaker upstream players," said Joel Ng, an analyst at KGI Fraser Securities in Singapore.

KrisEnergy also has a S$200 million bond due in August 2018, in addition to a US$148.3 million (S$199.7 million) secured revolving credit facility with DBS Group Holdings, according to an investor presentation released Monday.

The note indicates that under the covenants, the firm's permissible fixed-charge coverage ratio will be two times from next year, from the current 1.5 times.