June 11 (Bloomberg) -- Warren Resources Inc., the oil and natural gas company, postponed its debut issue of $200 million of eight-year bonds with dollar-denominated corporate bond yields at the highest level in nine months.
The senior notes, rated Caa1 by Moody’s Investors Service, the fifth-lowest level of speculative grade, were marketed beginning May 30, according to a person with knowledge of the transaction who asked not to be identified, citing lack of authorization to speak publicly. The bonds were marketed to yield 8.25 percent to 8.5 percent on June 6.
Proceeds from the issue, which Bank of Montreal was managing, were expected to be used to repay revolving debt, for capital expenditures and general corporate purposes, the person said.
“The conditions in the debt capital markets have led us to conclude that we should delay our offering,” Philip A. Epstein, Warren’s chairman and chief executive officer, wrote in a statement yesterday. The New York-based company can be “opportunistic about timing,” he added.
Warren joins London-based Petrofac Ltd., ZAO Russian Standard Bank and China International Marine Containers Co. that have pulled deals from the U.S. market in the last month, according to people with knowledge of the offerings. The cancellations come even as dollar-denominated sales reach a record pace, with $760.2 billion issued this year, according to data compiled by Bloomberg.
Yields on dollar-denominated bonds from the most creditworthy to the riskiest borrowers reached 3.84 percent yesterday, the most since September and up 49 basis points from a record-low 3.35 percent on May 2, according to the Bank of America Merrill Lynch U.S. Corporate & High Yield index. Yields are climbing for a seventh-straight week, the longest stretch since October 2008, as investor concern deepens that the Federal Reserve will curtail its $85 billion in monthly bond purchases.
Petrofac canceled its offering of five- and 10-year bonds, provisionally rated Baa1 by Moody’s, on June 3, citing market conditions, according to a person with knowledge of that transaction, who asked not to be identified, citing lack of authorization to speak publicly. Russian Standard postponed its offering on May 24 also citing market conditions and China International shelved its planned sale of five-year debt on May 16, people with knowledge of the transactions said.
To contact the reporter on this story: Sarika Gangar in New York at email@example.com
To contact the editor responsible for this story Alan Goldstein at firstname.lastname@example.org