OHL's bonds jump on proposed capital raise
By Robert Smith
LONDON, July 31 (IFR) - Obrascon Huarte Lain's bonds traded up strongly on Friday after the Spanish builder announced it would raise fresh capital to pay down debt.
OHL's bonds and shares came under pressure this year after the company had to post more collateral against a margin loan on OHL Mexico stock in May following allegations of corruption at its Mexican unit.
This has fostered more scrutiny of the Spanish firm's accounts, with some investors arguing that a EUR1bn intercompany loan was raised to avoid breaching a covenant.
But news that OHL will raise 1bn in a share sale, with 650m earmarked to reduce debt, has given its debt a much needed fillip.
OHL's 325m 5.5% 2023 senior bond soared from a cash price bid of 87 to 92.40 on Friday morning, according to Tradeweb prices. The bond was bid as low as 80 earlier this month.
This means the note has nearly climbed back to its reoffer price. The paper was issued at a discount of 93.866 to yield 6.5% in March, as banks running the deal underwrote it at a lower yield than the market would accept.
OHL has also indicated that more debt could be paid down beyond the capital raise. The company said it was in talks to sell assets in its engineering and construction division, which would provide another 250m in cash in the fourth quarter to further reduce debt. (Reporting by Robert Smith, editing by Helene Durand, Julian Baker)
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