MARKET SIGNALS
INVESTMENT IDEAS
Today we will look at two debt securities as investment ideas for this week: Matador Resources and GTLK
IDEA #1: Matador Resources
In the segment of high-yield securities, we turn our attention to the Eurobonds of the US shale oil and gas producer Matador Resources. The issuer is engaged in exploration, development and production of oil and gas resources in the states of Texas, Louisiana and New Mexico. Headquartered in Dallas, Texas. The company’s shares are traded on the NYSE with a current market capitalization of $ 1.8 billion.
Credit agencies Moody’s and S&P maintain a “stable” forecast for the issuer, its composite rating is at B +. As of September 30, 2019, the values of the company’s main credit metrics are at quite moderate levels: for example, the Net Debt / EBITDA metric is 2.6x, the coverage ratio is 3.7x. The bulk of the debt ($ 1.1 billion out of $ 1.6 billion) was represented by the Eurobond maturing in September 2026.
The senior unsecured issue of MTDR 5 ⅞ 09/15/26 was posted exactly a year ago. The emissions market is global. Four call options are provided for the issue, the yield of the closest of them (September 15, 2021 at a price of 104.406%) is 8.9%. The minimum lot on paper is 2 thousand dollars.
IDEA #2: MTS
Among the papers with quasi-sovereign risk, Eurobonds of the State Transport Leasing Company (GTLK) look interesting. At the end of September, the issuer placed the issue maturing in 2026, expanding the range of dollar Eurobonds to 4 securities. The Moody’s and Fitch agencies hold Ba2 and BB + ratings for GTLK senior unsecured debt, respectively.
In the GTLK line, we prefer an issue with maturity in April 2025, which trades with the highest premium on yield to the sovereign curve. The Eurobond offers a yield of 4.5% with a duration of 4.7 years.
Alexey Shternshis
Joint Managing Director
Capital Pi
