CONSEN 5.625 10/15/2028 & CONSEN 12.000 02/15/2031

Publicly traded companies mentioned herein: N/A

Highlights

The presenter is short Consolidated Energy’s 2028 5.625% bond trading in the low-80 range and 2031 12% bond trading around par, both of which are BB- rated and currently yielding LDD%. He estimates that 67% – 75% of the asset value comes from the company’s methanol and ammonia plants in Trinidad. However, government contracts with LNG suppliers in Trinidad have been becoming less profitable, leading to declining EBITDA at Consolidated Energy in recent years. Consolidated Energy is currently run-rating at ~$400MM of EBITDA which equates to 8x total leverage, and the company’s liquidity is limited. This is worrisome given the upcoming $222MM maturity in 2026, as well as a subsidiary term loan that will need refinancing in 2025 but can likely be dealt with. He ultimately expects the structure to blow up sooner than later, at which point the regular way holders will need to sell, and it will be difficult to find new buyers of these unsecured bonds while the company’s assets trend toward zero value.