Asia Fixed Income Analyst

Derek Silva

Credit

<p>Puma Energy (bond ticker: PUMAFN) is a Singaporean distributor and marketer of oil products with a global footprint (Americas: 31.9% of gross profit; Asia-Pacific: 28.9%; Africa: 27.5%; Europe: 12.3%). EM bond traders tend to put Puma's bonds in the runs for EM oil issuers rather than Asia HY, but it is mostly downstream in operation and, therefore, less affected by movements in crude oil than upstream issuers. </p>
<p>And the company’s results don’t look bad. So why are the bonds trading with a cash price in the 80s and providing yields in excess of 9%? One could point to the recent issuance failure for clues: Puma had planned to issue a new USD bond about a month ago, but the issue was pulled due to ‘market conditions’, although <a href="https://www.globalcapital.com/article/b1npyh2gnmh3yb/puma-energy-pulls-bond-investors-say-credit-story-39uncredible39" target="_blank" rel="noopener">reports say investors were unconvinced of the credit story</a>.</p>
<p>But we think the overhang from having controversial commodity trader Trafigura as the biggest owner is another key monkey on Puma’s back. And this week, there was more negative news about Trafigura and some pretty nasty speculations about its activities and intentions as a shareholder in other companies. More details on that below.</p>
<p>So, while the bonds have not reacted yet to this latest news, we think there is still room for pessimism in Puma Energy, as it is in a pretty tight liquidity situation, has relatively high net leverage, and its own operations and credit quality are closely tied to that of Trafigura.  </p>
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<div class="content-caption">Source: Cbonds</div>
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Puma Energy (bond ticker: PUMAFN) is a Singaporean distributor and marketer of oil products with a global footprint (Americas: 31.9% of gross profit; Asia-Pacific: 28.9%; Africa: 27.5%; Europe: 12.3%). EM bond traders tend to put Puma's bonds in the runs for EM oil issuers rather than Asia HY, but it is mostly downstream in operation and, therefore, less affected by movements in crude oil than upstream issuers. 
And the company’s results don’t look bad. So why are the bonds trading with a cash price in the 80s and providing yields in excess of 9%? One could point to the recent issuance failure for clues: Puma had planned to issue a new USD bond about a month ago, but the issue was pulled due to ‘market conditions’, although reports say investors were unconvinced of the credit story.
But we think the overhang from having controversial commodity trader Trafigura as the biggest owner is another key monkey on Puma’s back. And this week, there was more negative news about Trafigura and some pretty nasty speculations about its activities and intentions as a shareholder in other companies. More details on that below.
So, while the bonds have not reacted yet to this latest news, we think there is still room for pessimism in Puma Energy, as it is in a pretty tight liquidity situation, has relatively high net leverage, and its own operations and credit quality are closely tied to that of Trafigura.  


Source: Cbonds


Puma Energy: Controversial Owner Trafigura in the Headlines Again – More Downside for Puma?

Singapore

Puma Energy Holdings Pte Ltd operates as a holding company,. The Company, through its subsidiaries, owns and operates storage facilities, as well as refines, distributes and sells petroleum products, lubricants, and aviation products. Puma Energy Holdings serves customers worldwide.

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Puma Energy (0945314D SP)

Puma Energy: Controversial Owner Trafigura in the Headlines Again – More Downside for Puma?

Puma Energy is a downstream oil play with a decent operational track record. So why doesn't a yield of over 9% attract buyers? The answer may be...

Derek Silva

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