Raffinerie Heide bonds lose ground as refinancing pressure mounts

Bonds backing German-based oil refinery group Raffinerie Heide GmbH have lost more than three points this week as heightened refinancing risk added to uncertainty as to whether the company will be able to replace its bonds which mature in 2022.

The company's €250 million of secured notes due December are today quoted at 86.69/88.18, according to Refinitiv prices, down from around 90-bid on Jan. 21. The notes were put in place in November 2027, with the bulk of proceeds used to fund a shareholder dividend.

Raffinerie Heide is rated CCC+ by S&P Global Ratings and Caa2 by Moody's. S&P Global Ratings said in a Dec. 9, 2021, bulletin that the company's weak results and lack of progress towards refinancing its bonds were neutral for its rating. Ratings said this was because the group's parent company, London-based Klesch Group, was progressing with plans to acquire the Kalundborg refinery in Denmark from Norway's Equinor ASA, which will be financed at the parent level with a package that includes the refinancing of the existing bonds.

News in a Klesch Group press release published Jan. 3 that Danish authorities formally approved the takeover of the refinery sent the Raffinerie Heide bonds up to highs of 94.4, but on Jan. 20, the notes entered freefall as rising tensions in Ukraine piled pressure on riskier names in the sector.