Medco USD Notes Rebound; Lucror Sees Positives in Ophir Deal

(Bloomberg) -- Medco Energi’s dollar bonds recouped some of this week’s losses as Lucror Analytics says a successful bid for Ophir Energy will boost scale and diversification.

The co.’s Jan. 2025 notes jumped 1.3 cents on the dollar to 92.5 cents as of 1:15pm Hong Kong time, according to Bloomberg-compiled prices. They fell ~1.9 cents in the past two days after offering to take over Ophir.

Weak oil price environment allows Medco to acquire the assets at an attractive valuation, Lucror analyst Leonard Law writes in note. Still, he’s keeping a “hold” recommendation on Medco bonds, on concern about oil-price volatility and debt-funded acquisitions.

Medco’s 2022 and 2025 notes are trading at fair value at current yield of 7.5% to 8.5%, Law says separately by phone; he would consider upgrading his recommendation if spreads widen by 50-100bps from here.

NOTE: Medco Reaches Takeover Deal for Ophir With 55-Pence-a-Share Bid

2019-01-31 06:31:20.904 GMT

By David Yong