Bonds of Abengoa SA rose to the highest in almost a month as the company seeks to persuade holders of its convertible notes to exchange their securities for equity as it attempts to cut its debt pile.
The Seville, Spain-based renewable energy company’s 6 percent bonds due March 2021 rose 0.8 cents on the euro to 94 cents, the highest since March 12, data compiled by Bloomberg show. Abengoa is asking holders of as much as 200 million euros ($217 million) of the 6.25 percent notes due January 2019 to convert them into stock, according to a regulatory filing.
The company is selling assets and reducing debt to restore investor confidence after its bonds lost as much as 31 percent in value in a November selloff when it reclassified about $600 million of high-yield notes as non-recourse, making bondholders lose trust in their corporate guarantee. In exchange for giving up the possibility of converting at a higher price nearer to maturity if the stock performs well, Abengoa is offering an additional cash payment to noteholders.
“The conversion looks positive as Abengoa is trying to decrease debt,” said Andrey Kuznetsov, a credit analyst at Hermes Investment Management in London, which oversees about $44.5 billion of assets and doesn’t hold any Abengoa bonds. “Improvement in the credit profile requires both a decrease in debt and better earnings.”
Abengoa expects revenues to rise to between about 1.54 billion euros and 1.57 billion euros in the first three months of the year, an increase of 1 percent comparing the middle of that range with the same period last year, the company said Tuesday.
Abengoa’s shares at 3.33 euros are now about 12 percent higher than the conversion price, data compiled by Bloomberg show. The convertible notes are quoted at 130 cents on the euro, compared with a low of 74.5 cents in July 2013.