What’s the deal? Ocean Yield has completed a $100 million perpetual callable hybrid bond issue, carrying a coupon of SOFR + 350 basis points a year with quarterly interest payments. The Norwegian ship-owning company said the placement was oversubscribed. Arctic Securities, Danske Bank, and DNB Carnegie acted as joint lead managers.
Why now? The proceeds will refinance Ocean Yield’s outstanding OCY10 bonds and cover general corporate purposes. In tandem, the company repurchased $14.8 million of OCY10, lifting its holdings to $95.2 million of the $110 million total outstanding.
What’s the endgame? Ocean Yield intends to call OCY10 at 101.00% of par once its sale to A.P. Moller Holding closes, as per the bond terms. Certain primary insiders and close associates subscribed for and were allocated bonds in the issue.
What could go wrong? The planned redemption hinges on the A.P. Moller Holding acquisition completing. A delay or collapse of that deal would alter the timeline for calling the older notes.
The signal: Ocean Yield invests in vessels on long-term charters, giving it a contract backlog that offers earnings visibility. Tapping the hybrid bond market amid a pending takeover shows how ship-owning firms are refinancing legacy debt while corporate ownership shifts. An application will be made to list the new bonds on Oslo Børs.
Read more: MFN
Image credit: Ocean Yield
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