Halister News

(Bloomberg) -- Investors should switch into notes issued by Indonesian coal miner Bumi Resources for bigger gains as the rally in Indika Energy bonds cools, according to BNP Paribas.

• “Bumi is our top pick in the Indonesian coal sector,” the French bank says in a note Thursday. “The settlement deadline for the restructured Bumi bonds has been extended until Sept. 11, so the instruments would be free to trade from Sept. 12 onwards”
  • NOTE: Bumi Resources Starts Debt Exchange in Restructuring Plan
  • NOTE: Bumi Sees 2017 Profit at $350m on Higher Coal Price, Debt Recast
• Indika Energy’s 2023s have performed well since the bank started covering them when they were trading ~50 cents on the dollar due to coal price rebound and the co.’s refinancing efforts: BNP
• While the notes still offer “good carry” through the winter, there is little price upside seen with 2022s yielding 6.4% and 2023s at 6.7%
  • Risk for the bonds may be more supply in sector as “we hear few new Indonesian coal company mandates could price in the coming weeks”
  • Indika unlikely to benefit more from coal price increases this yr as only a small proportion of its coal contracts are pegged to benchmark spot price
• NOTE: Coal at Newcastle port +1.6% to $96.20 ytd; +87% in 2016

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net Chan Tien Hin