Investors Take a Shine to PacRu

Colombia’s Pacific Rubiales joined other issuers rushing to market Monday when it priced a $300m 10-year NC5 that was upsized by $50m to make room for more accounts after getting $250m in reverse inquiry. The Ba3/BB E&P operator priced the bond at par with a 7.250% coupon, tight to guidance of 7.375% (+/- 0.125), following initial 7.5% whispers. The bonds were trading up a point in the grey, according to one investor. The trade was largely comped against the borrower’s existing 8.75% 2016s which had been trading at 6.1%-6.0% YTM or at 5.57% on a yield to average life basis. “The deal was not cheap, but it is a good credit, safe haven and operates in the jurisdiction where there is local demand for the bonds,” notes one investor. Demand was driven by high quality asset management accounts mostly from the US. The funds will be used for general corporate purposes. Bank of America Merrill Lynch (BAML) was sole bookrunner on the transaction. Last month, PacRu converted CAD236m ($232m) of its 8% 2014 convertible debentures via an early conversion offer that drew participation from holders of 98.9% of the bonds. One of LatAm’s largest private oil and gas companies, Pacific Rubiales has principal operations in Colombia, Peru and Guatemala. The 8.75% 2016 was its last previous new issue, done in November 2009 when it priced $450m at an 8.95% yield via BAML and Citi.