Abengoa’s high-yield bonds have plummeted in the secondary market after the company announced that its convertible and exchangeable bonds will now carry the same guarantees.
The Spanish energy firm held a conference call with investors on Thursday evening, with management arguing that because the convertible and exchangeable bonds did not have the same level of guarantees as its high-yield bonds, it has created an opportunity for investors to take “irrational positions” on its credit default swaps.
The company has decided to stop this by giving convertible and exchangeable bonds the same guarantees as its high-yield bonds, it said.
Abengoa’s high-yield bonds have not reacted well to this news on Friday morning.
The €375m 7% 2020 note tumbled more than five points from a cash price bid of 88.50 to 82.75, according to Tradeweb. This equates to a yield of more than 12%. This bond was issued at a discount of 97.954 to yield 7.75% in April, meaning it is now trading 15 points below its reoffer price.
