Pacific Rubiales Lures Buyers for 2016

Canada-based oil and gas company Pacific Rubiales, which operates in Colombia, is preparing to sell $400m in 2016 bonds. The plans follow reverse inquiry on a “non-deal” roadshow in late September, bankers on the deal say, and the bond is expected to price Thursday. The new notes amortize equally in years 5, 6 and 7, for an average life of approximately 6 years. BofA-Merrill Lynch and Citi are managing the sale, rated BB minus/B+ and guaranteed by Rubiales Holding and various subsidiaries. Rubiales plans to use proceeds for general corporate purposes and to repay a 4-year $250m loan provided in May by BNP Paribas, Calyon, Banco Davivienda and WestLB, paying Libor plus 550bp. The issuer also announced this week that it increased its 2010 capex budget by $394m to $853m after successfully ramping up production at the Rubiales and Piriri fields, exploration success at the Quifa block and opening of the ODL pipeline. Fitch notes the issuer’s strong liquidity position, as well as leadership position as the largest independent oil and gas player in Colombia and strong management with recognized expertise in heavy oil exploration and production. Risks include sustained adjusted leverage above 3x and/or production and reserve declines.