Karoon Energy USD Senior Secured B+ @ 8.8%

September 2024

By Jenna Labib

With the AUD/USD at a yearly high hovering around 69c, this presents an opportunity for clients looking to add to USD positions.

Karoon Energy Ltd (ASX: KAR) is an ASX listed international oil and gas exploration and production company with assets in Brazil, the United States of America and Australia. In April 2024, S&P assigned its ‘B’ long-term issuer credit rating to Karoon. The stable rating outlook incorporates their view that Karoon will maintain its financial discipline as it seeks to increase production and reserves through asset enhancements, developments, and strategic asset acquisitions. S&P’s base case incorporates a ratio of average funds from operations (FFO) to debt of more than 45% and a ratio of debt to EBITDA of below 2.0x over the next two years.

S&P assigned a ‘B+’ long-term issue rating to the company’s Senior Secured Second-Lien notes. The ‘2’ recovery rating on the notes indicates their expectation of substantial recovery (rounded estimate: 80%) in the event of a default. Please see the S&P report on these notes.

The Karoon Energy 10.5% Senior Secured bond is currently available to pick up ~105.20, which is a yield of ~8.77% to maturity in 2029. This bond has an early call on 14 May 2026 at a price of 105.25, which would be a yield of 9.99%. There is also a call on 14 May 2027 at 102.625, which would be a yield of 9.12%.

Call Schedule

Transaction Pricing

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