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EnQuest plc – potential for double digit yield

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EnQuest has quite the incentive to refinance its $ bond this year: doing so will automatically extend its bank facility out to 2028. The $ bond will yield solid double digits if they do it during 2022 (likely). Yield to maturity in October 2023 is still 10%.

The £ bond has a 50bps make whole provision that makes it more expensive to take out early (109+ rather than par), but they haven’t ruled out doing both bonds at the same time.

Whatever the timing, EnQuest will be delevering by taking decent bites out of its debt, with an extra push provided by oil’s current high price, both in the run up to refinancing, and after. Leverage should be <2.0x this year and falling.

EnQuest – Desknote 26 January 2022

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