EM CEEMEA CREDIT: Kosmos Energy: Q3 Earnings
(KOS; Caa1neg/CCC+neg/B-RWN)
- Credit sentiment remains under pressure as net loss for the quarter and declining y/y revenues add to near term volatility. Whilst the Co. has put refi in place for 26s, secondary markets show pressure on valuations for longer dated bonds, with KOS Oct31s charting at new lows of 65.5 cash px or -1.5pt on the day. The negative rating outlooks already reflect the credit metrics.
- Ghana focused oil&gas Kosmos Energy posted Q3 earnings earlier today, showing net prod’n around 65.5k boepd (FY25 guidance at 65k boepd), +3% q/q on ramp up at GTA and increased prod’n at Jubilee field. Sales sat at 59.9k boepd, giving rev’s of USD311mn or $56.39 per boe, missed estimates. Q3 Net Income was a loss of USD124mn. The Co. indicated increased hedging to 8.5mn barrels for ‘26.
- Prod’n expenses indicated restrain across segments, -39% q/q at USD148mn, or $19.51 per boe with FY25 guidance at $22 per boe.
- Capex stood at USD67mn, sequentially lower vs USD86mn in Q2 and below guidance on lower spending in both Ghana and the Gulf of America. FY25 capex guidance has been revised down to lower than USD350mn, a y/y reduction of USD500mn.
- Cash from operation was negative USD28mn, with FCF consumption reported at USD99mn for the quarter, in tune with the decline in top line.
- Short term refi has been addressed but liquidity remains tight. A term loan financing with Shell for up to USD250mn was secured for short-dated debt repayment during the quarter. The reserve-based lending (RBL) got redetermined at USD1.35bn. Liquidity remains tight with cash & equiv at USD64mn and the new Term Loan adding to existing UF of USD225mn. The Net Debt at end of period has been reported up q/q at USD2.9bn.
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USDCAD TECHS: Fresh Cycle High
- RES 4: 1.4111 High Apr 10
- RES 3: 1.4045 3.0% Upper Bollinger Band
- RES 2: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 1: 1.3989 200-dma
- PRICE: 1.3953 @ 16:02 BST Oct 3
- SUP 1: 1.3897/3825 Low Sep 30 / 50-day EMA
- SUP 2: 1.3727 Low Aug 29 and a bear trigger
- SUP 3: 1.3689 Low Jul 28
- SUP 4: 1.3637 Low Jul 25
A bull cycle in USDCAD remains intact and yesterday’s break above the late September’s high, firms the bullish theme. This move higher also maintains the bullish price sequence of higher highs and higher lows. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4019, a Fibonacci retracement point. On the downside, first key support lies at 1.3825, the 50-day EMA.
AUDUSD TECHS: Support Remains Intact For Now
- RES 4: 0.6763 1.382 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 3: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
- RES 2: 0.6660/6707 High Sep 18 / 17 and key resistance
- RES 1: 0.6629 High Sep 30 & Oct 01
- PRICE: 0.6603 @ 16:01 BST Oct 3
- SUP 1: 0.6527/21 61.8% of the Aug 21 - Sep 17 bull leg / Low Sep 26
- SUP 2: 0.6484 76.4% retracement of the Aug 21 - Sep 17 bull leg
- SUP 3: 0.6463/6415 Low Aug 27 / Low Aug 21 / 22 and a bear trigger
- SUP 4: 0.6373 Low Jun 23
The AUDUSD uptrend remains intact and recent weakness appears to have been a correction. Support to watch lies at the 50-day EMA, at 0.6558. A clear break of this average would signal scope for a deeper retracement and expose 0.6527 once again, a Fibonacci retracement. For bulls, a stronger reversal higher would refocus attention on 0.6707, the Sep 17 high. Initial resistance to watch is 0.6629, the Sep 30 and Oct 1 high.
US TSYS/SUPPLY: September's Coupon Auctions Were Generally Solid (2/2)
September’s coupon auctions were generally solid, with three lines trading through, two coming out on the screws and two tailing slightly.
- Looking through the lens of MNI’s Relative Strength Indicator (RSI), five lines saw positive readings while two saw negative readings.
- The 3-year sale was the strongest auction of the month according to MNI’s RSI. The 3-year line traded through 0.7bps, the largest stop through in seven months. Meanwhile, the primary dealer take-up was just 8.4%, the lowest on record (data going back to 2003).
- The weakest sale of the month was the last – the 7-year line. This line saw the second consecutive 0.5bp tail, with the 12.0% primary dealer take-up above August’s 9.8% and July’s record low 4.1%.
September Auction Review:
- 2Y Note on-the-screws: 3.571% vs. 3.571% WI.
- 2Y FRN: 0.200% high margin vs. 0.195% prior
- 3Y Note trade-through: 3.485% vs. 3.492% WI.
- 5Y Note tail: 3.710% vs 3.709% WI.
- 7Y Note tail: 3.953% vs. 3.948% WI.
- 10Y Note trade-through: 4.033% vs. 4.047% WI.
- 10Y TIPS: 1.734% high yield vs. 1.985% prior
- 20Y Bond trade-through: 4.613% vs 4.615% WI.
- 30Y Bond on-the-screws: 4.651% vs. 4.651% WI.
