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Does any one know that the quoted price is 'Dirty' or 'Clean' for this bond. I sold some in April before the rehash, but was told by AJ Bell that accrued interest was not payable, Though it was showing separately in addition to the price on two valuations before I sold, but their dealing dept refused to budge. In the past 5-6 years ago the accrued interest was always added on buy/sell price apart from the time when It was not paying cash but PIK. So I then bought back some just to chaeck! AJ bell duly cgharged the accrued interest on the buy.
Needless to say I have complained to the Ombudsman, had an automated reply but it will probably be several months before they get round to having alook.
So in the meantime will be interesting to know if someone has sold or bought recently ?
Yep will take up exchange especially as they pay a bonus on top of 1.5%. However may not hold too long have learnt a big lesson that oil is a boom and bust game. It's boom at the moment but the new bonds are until 2027 which is a huge time in this game and what looks all rosy now can soon change in 5 years. I suspect in any case if the company does really well they will be repaid in a few years so won't get 5 years of 9%.
Exchange offer. Think I will take it up. 9% Notes.
Now squeaked in just above par at 101 ask price. Nice positive signal.
Surprised this is still almost at near par with the awful production update. The market has had enough of this stock and now under two years until this either needs to be refinanced or potentially extended yet again. I suspect it will all end up with another begging bowl to shareholders but if production continues to sink then these getting repaid (along with the other debt due) becomes a little sketchy. For me these are a strong sell, if you have been a long term holder thank your stars for the interest and to get out without losing your shirt.
There would be a capital gain on any bonds that are acquired below par and then sold/redeemed at or above par.
I.e. if you bought the bonds at £1 a bond and in 2023 they redeem at £1 a bond you would have no capital gain on the bond but would have a capital gain on the difference in the fair value of the PIK bonds at the time of issue and the value at the time of redemption. If you bought the bonds at £0.5 a bond and in 2023 they redeem at £1 you would have a capital gain on the bond too.
Unless you have a large amount of capital gains in the year these dispose of (and don't have taxable losses you can offset them again - always worth checking), then unless you hold very large amounts of these bonds then capital gains in unlikely to be an issue as capital gains allowance is £12,300.
Thanks for the reply pyueck. This is a little complicated for a rank amateur.. For the amount of 'interest' that I have above my tax allowance professional advice is probably out of the question. Is there a capital gain on this bond or just for the pik component? I believed the original bond was 'qualifying. Thank god for ISA's.
Good question. I think the answer is that (unless held in an ISA) that they should be valued at the fair value of the bond at the time of the PIK issue, with any change between then and redemption/sale a capital gain. i.e. if the bonds were trading at 50p in the £1 when the PIK were issued and you were issued with 1,000 new £1 bonds, then the income would be £500, and if they are subsequently redeemed/sold for £1 a bond/£1000 you have a capital gain of £500 at the time of sale/redemption. All the interest should be declared as income. Just my reading of things, but if you want to be sure you would need some expensive advice.
Does anyone know how new pik bonds are treated for income tax purposes?
Yes look in a pretty good place. Compared with 16 months ago incredible. Never forget though that oil can do anything but with hedges and refinancing then the chances of this one not being repaid now seem low. Expect this one to go over par soon, will probably cash out at that time as will leave happy.
Heading back towards pat after today’s refinancing news. With a 7% coupon on these and running to 2023 what is not to like here. Solid !
Hi guys, there is a lot of info to wade through and I was looking at the RB and the HYN. Slight confusion and possibly not that material but at the onset the RB was set at 5.50 percent in 2013. In2016 it was raised to7 percent. However, from a quick check the HYN was set at 7 percent back in 2014 and unchanged in 2016 except for fees and PIK. Have I missed something?
Why do i own shares when will sell bonds when they get to 90p? Simple, equity shares have unlimited upside and potentially 100% downside. Bonds have limited upside but potentially 100% downside. All comes down to risk/reward, once these get to 90p, I think the risk reward doesn't stack up. Remember to get your money back on these bonds will pretty certainly rely on the company being able to issue new debt. Let's hope oil doesn't crash but still predicting the price of oil in Autumn 2023 is a finger in the air exercise.
Afraid I don't get your logic if you are going to sell the Bonds because of the risk why do you own shares in Enquest as well?
and the market is not a knowing entity it gives a price that reflects demand. I accept there is always risk but at the time the Bonds were issued at £1 with a 5% yield my judgment is it was higher then, than it is now. The Market gave you that risk then for a 5% yield at the moment as you say you are looking at a 20% yield now. We all make our own decisions and It is not my place to judge yours just interested in your logic for all I know it may be right. For me when they trade for 102p I will probably sell as would rather then have a fund for a 5% return
Sorry PRDanes but be careful with statement's like "the Bonds is almost guaranteed to come good now'. The bond has a yield to maturity of getting on for 20%, nobody gives you that with no risk. It looks likelier that they will come good but the market is still telling us that there is around a 20% chance of default. I have been in oil too long to think that a good run with oil means that there are no troubled waters ahead. Enquest is still a very highly leveraged oil company and a significant reduction in oil price could still very quickly wipe equity holders out and leave very little for bondholders, especially as with the latest deal other debtholders will be repaid quite soon before Enquest.
Fair enough 90p could be next week then. I think price has been held back more by not giving holders the temptation to sell and buy into Equity not much temptation of switching from Equity into Bonds at moment.
I was tempted a while back to go all out Equity, but have a good chunk of Equity and sitting on my hands with the Bonds is almost guaranteed to come good now, remember the Equity will always lose out in preference to the Bonds.
I meant if the bond get's to 90p I will still cash out, not if oil gets to $90bbl!
Yes slightly surprising that the bond price has not increased a little more than it has. I suspect some of it is that bond investors probably got caught out in the past, yes oil price is currently doing very nicely, but history tells us that anything can happen.
Remember with bonds you only can get back the face value of a bond, but you can lose everything. Therefore if oil say rises to $150bbl, shareholders may do incredibly, but bondholders will still only get repaid the value of the bond (plus interest of course). If oil crashes to $20bbl then bondholders could still lose the lot.
No idea what oil will do, predicting that is a mugs game, therefore for me I still think if this gets to $90bbl I will cash out and wish holders well.
Cash next time is defiantly on the cards, am surprised at bond price being stuck at the moment.
I am expecting to see your 90p price very soon.
It would make me happy if the next interest payment was in cash. Been a good few years since seen any cash returned from this one and with the PIK's the interest will be about 10% higher than the last one paid. As a reminder for the interest to be paid in cash the average daily closing price of brent has to be $65 or higher in the 6 month period ending a month before the interest is paid. Therefore for the next one the calculation started on January 15th. As the price between January 15th and the end of Feb averaged around $60, the average for the rest of the period will need to average a bit above $65 to bring up the average for the 6 month period above $65. I calculate it to be around $66. Brent is at the time of writing $65.58, so still a little way to go, but cash is very possible.
Hi Guys, I was looking for the PYUECK post of 16 Feb which I thought was well written and needed saying and found this board. I am a tad annoyed about the claims on the share board of what the new US administration will do. That is as easy to be right as picking the oil price. I was going to use the PYUECK post as a supporting argument. Now I won't because it might attract them to this board. I am very interested in the RB and HYN. I started keeping track of the HYN and Tullow's bonds since October 2020. I know a bit about interest rates and did deal in them 20 odd years ago. I even set LIBOR rates in Italian Lira 40 years ago so I'm not up to date but the maths hasn't changed. I dealt in forward foreign exchange which is based on interest rates. What I wasn't expert about was credit ratings and still am not. I'm certainly rusty and you two are probably better at the sums than me. My wife did bond settlements and she's forgotten everything. I also know someone well who worked for Moody's and the only tip I got was to AVOID the dreaded phrase "on watch".
I do of course have a view on the oil price and the new US administration. Oil will be higher and at some stage dragged back by shale. Biden will negotiate with Republicans (and Democrats) because that is what always happens. Oil will see us out.
Stay Lucky. If I have anything to say or add to HYN or RB I'll post it here. It gets drowned out on the other board.
Hi PYUECK always good to chew thing over before panic selling.
The reason to hold Bonds is they are safer than Equity, if they are not able to repay the Bonds in full on the due date then the Equity will be worthless, a deal is usually sorted out in preference to going bust, that is why PMO shareholders put up 60% of the assets into new company but only get 5% share of it. Bond holders did much better not sure of all the details don't hold PMO, but the general principal will be should your worries about Enquest come about, Bondholders will control the assets, Equity will lose everything, and the MD owns 11% of that Equity so is very determined to make sure that doesn't happen. Oil is looking bright and as I said by the time we see 90p the risk of default will be seen as so low I don't see point of panic selling then, it is not impossible that these will trade at a premium towards the end with interest rates at .25% and these paying 7%
We all make our own decisions I am just glad someone panicked and sold them to me at 35p but the risk was a lot higher then.
Hi, nice to have somebody else on this board!
Clearly my confidence in this bond repaying has increased significantly since last march but I am still a long way from being confident that the bond will be paid in full. I have been here too many times, last January the bond was above 90p, by march it was under 30p. Clearly that was hopefully a once in a generation shock, but big crashes in oil price are an all to often occurrence. I still think that once the bonds hit 90p then I will sell. With the PIK's at 7% for a few years, then overall will get back more than I invested, which would be a good result when you look at what the share price has done during this time. I hope when the bond hits 90p the finishing post is near, but could also be a fall at the final hurdle! This is still a hugely leveraged company that needs oil to be at a high price for a long time to repay.
However, very nice to see the oil price approach $65! Never know the September bond payment could potentially be in cash, not beyond hope!
I am also not so confident as you that on maturity we will have a choice of cash or new bonds. I think it will either be one of two things a) Enq will have easy access to borrow at much lower rates than the bonds and they will get repaid in full or b) Enq bonds will still trade way below par and there will be some extension or some 'deal' PMO style.
I understand the frustration but I am confident they will be met in full, probably by a new Bond that you will have choice of taking up or taking your cash. If you are not confident do you realise you can always sell your PIK anything over 73p will give you your expected 5% return when you purchased them. You get the 7% when they mature or when oil is over $65.
Gritted teeth required I think when they get to 90p we will be near the finishing post.
For any longterm bondholders like myself, this one has been a total rollercoaster. Things are looking far better than they were 10 months ago, but still big risks remain. Will Enq have the cash to be able to repay this bond in 2023, especially with this new deal meaning more debt is being taken on that will be due before our retail bonds are repaid. Can't help thinking that unless oil shoots to $100bbl that somehow the maturity of this bond will get pushed even further out.
Be nice if oil keeps rising to over $65bbl and we get paid in cash. PIK seem to just ramp up my exposure to this casino of a bond!
I have been in this one from the start and have seen too many times the oil price rise, and everybody assumes good times are here, only for them to crash and all the uncertainty returns. For me the minute these are over 90p in the pound I am selling up. The risk of the oil price crashing again is just not worth the benefits.