The Oil Drum

289 comments on DrumBeat: June 27, 2007

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Leanan on June 27, 2007 - 5:03pm

How's this for a strange connection between energy and finance...

MISC Postpones Bond Sale on `Market Volatility'

MISC Bhd., the world's biggest owner of liquefied natural gas tankers, postponed a planned dollar- denominated bond sale because of fluctuations in debt yields sparked by losses linked to U.S. subprime mortgages.

Kuala Lumpur-based MISC, a unit of Malaysian state-owned oil company Petroliam Nasional Bhd., hired Citigroup Inc. and Deutsche Bank AG to sell $750 million of 10-year bonds, an e-mail sent to investors earlier this week showed.

``Given the current market volatility, MISC has decided to put their transaction on hold pending more stable market conditions,'' according to an e-mail sent to investors today by one of the sale's arrangers.

Investors have increased their aversion to riskier investments on concern that losses at two hedge funds run by Bear Stearns Cos. could become more widespread. Credit-default swaps based on $10 million of debt included in the iTraxx Asia ex-Japan Index of 50 companies jumped to $15,750 yesterday, from $10,750 a week ago, according to Morgan Stanley.

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totoneila on June 27, 2007 - 5:28pm

Hello Leanan,

I am no finance wizard, but it seems that if, in some locations, are peaking in natgas relatively soon: this company should have no problem selling stock shares to raise funds for building more LNG tankers. My feeble two cents.

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HeIsSoFly on June 27, 2007 - 5:39pm

Leanan,

That is completely nuts. The biggest LNG tanker firm globally not issuing bonds because of US subprime mortgeges?!

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Don Sailorman on June 27, 2007 - 8:16pm

No, it is not nuts.

Financial types HATE volatility. The uncertainty and risk here is that one would have to sell bonds below par because of FUD related to the Bear Stearns hedge funds fiasco.

If I wanted to sell bonds I would wait for a strong and stable market environment.

Also, I think bonds to finance investments in LNG are inherently risky, because the stuff blows up so easily. Those tankers are floating bombs. And remember the very last scene in the fine film "Syriana"? Now that was a scary one.