EM CEEMEA CREDIT: TLWLN: Trading update, relief for bonds
Tullow Oil (TLWLN; Caa1NEG/B-NEG/-)
Trading update, no negative surprises, should be a relief for bonds
• Co will explore opportunities for refinancing the capital structure when the new CEO is in place. The objective is to target net debt below USD1bn, which will come partially from disposals.
• FCF of c. USD156mn at the lower end of company guidance of USD150-200mn. Net debt of c. USD1.45bn which is broadly inline with company guidance of USD1.4bn.
• RCF of USD250mn remains until the end of June as previously announced.
• Previously management had mentioned “no uncovered debt maturities until May 26”. Today the company updated the market “Management plans to repay the 2025 Notes at maturity with a combination of cash in hand and drawings from the Glencore facility, and to refinance and simplify the Group’s capital structure during the remainder of 2025”.
• We view the company’s current liquidity status as just sufficient to repay/ refinance upcoming short dated March 25 debt maturity, but the company has significant more work to do via disposals and restructuring throughout the year to gain investor and rating agency confidence, we think this will be accelerated once a new CEO is in place.
(from our new EM Credit analyst Makeem Asif)
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Historical bullets
SILVER TECHS: Bearish Cycle Remains Intact
- RES 4: $34.903 - High Oct 23 and the bull trigger
- RES 3: $33.125 - High Nov 1
- RES 2: $32.338 - High Dec 12 and a key resistance
- RES 1: $30.676 - 50-day EMA
- PRICE: $28.945 @ 07:58 GMT Dec 31
- SUP 1: $28.748 - Low Dec 19
- SUP 2: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle
- SUP 3: $27.686 - Low Sep 6
- SUP 4: $26.451 - Low Aug 8
A bear cycle in Silver that started Oct 23 remains in play. The metal has recently breached support at $29.642, the Nov 28 low. The break lower opens $28.446, a Fibonacci retracement. Note that moving average studies are in a bear-mode position highlighting a dominant downtrend. Key resistance has been defined at $32.338, the Dec 12 high. A break of this level would signal a reversal.
USDCAD TECHS: Bullish Flag Formation
- RES 4: 1.4667 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4367 @ 07:52 GMT Dec 31
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4277/4103 20- and 50-day EMA values
- SUP 3: 1.4011 Low Dec 5
- SUP 4: 1.3928 Low Nov 25 and a key support
USDCAD bulls remain in the driver’s seat and the pair is holding on to the bulk of its recent gains. The latest pause appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.42779, the 20-day EMA. A pullback would be considered corrective.
GILTS: Opening calls
Gilt Opening call, 92.25.
- Also regarding the timing for the SETT price window, this should happen at 12:13-12:15 (GMT) for Futures and Options.
