EnQuest tops up retail bond

EnQuest tops up retail bond

Oil company EnQuest has issued a ‘top up’ on the retail bond it launched earlier in the year.

EnQuest became the first oil company to launch a retail bond in February 2013, when it raised £145 million.

The bond pays a coupon of 5.5 per cent bi-annually, on 15 August and 15 February, and matures in 2022. Now the business is looking to top up the bond in order to ‘continue to diversify its funding base and complement its already strong balance sheet’. 

Jonathan Swinney, chief financial officer at EnQuest, adds that the money will help with the development of its 'Kraken' oil project off the Shetland Islands, which will cost the company some $1.4 billion. 'When you have long-term projects you don't want to be beholden to the bank market, so diversifying fund is important. The tap relfects that we have increased our borrowing facility,' he explains.

Mike Dyson, head of fixed income, at Numis Securities, which is acting as sole lead manager on the issue, says: ‘When it launched in January the bond was well received; it’s a good sector and a good company and has traded quite well throughout the year, so there was a window to increase that original issue size.’ 

Dyson says the average mid-trade price on the bond on the London Stock Exchange’s Order Book for Retail bond has been above par at around 102.80p.

‘EnQuest is not looking to raised a fixed amount; it is a tap, so it’s not expecting to double the issue size. It will only be open for three or four days. Previous taps from other companies have raised £30 million or so, but it depends on demand – it could be more,’ he adds.

Dyson also points out that investors buying the bond in this period will be purchasing at the price of 101.65p plus interest accrued so far during the current interest period, in order for them to be paid a full coupon on the next date, 15 February 2014.

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I bought some of these bonds

I bought some of these bonds in about the autumn of 2014. All the so-called experts as far as I know never saw this catastrophic plunge coming in the oil price.

I'm no expert but in retrospect surely the increase in shale gas production in the US, the slow down in the Chinese economy and very slow growth in the Eurozone were obvious then. But I can remember no 'experts' warning of a plunge in the price of oil.

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