(Bloomberg) -- Bonds of Obrascon Huarte Lain SA surged the most on record after the Spanish builder sold about 600 million euros ($670 million) of shares in Abertis Infraestructuras SA.
The Spanish builder's 394.5 million euros of bonds due March 2022 rose as much as 6 cents on the euro to 84 cents on Tuesday, the biggest jump since the bonds were issued in March 2014 on a closing basis, according to data compiled by Bloomberg. Bonds due in 2023 also rose at the fastest pace on record.
OHL will repay a 266 million-euro loan and reduce debt by about 273 million euros following the sale of stock in the Spanish toll-road operator, the company said in a regulatory filing Monday. The company, which was hit by a corruption scandal in Mexico last year, was downgraded by Moody's Investors Service in August because of a first-half slump in earnings and amid concerns over rising debt levels.
“Bondholders want to see them reduce debt and that's what they're doing,” said Yves Berger, who helps oversee 4 billion euros as a portfolio manager at AXA Investment Managers Ltd. in London. “The tone is much better than during the summer.” Investors have also been closing short positions, or ending bets that the bonds' value will fall, he said.
The Madrid-based construction company raised 815 million euros in June with a similar asset sale and last month bought back 23.3 million euros of bonds due in 2020.
OHL's shares rose 3.6 percent to 3.87 euros at 2:40 p.m. London time after reaching 3.98 euros, their highest since June 23.
“This transaction entails an extraordinary strengthening of the balance sheet, with all proceeds from the transaction being used for debt reduction,” the company said in the filing.
To contact the reporters on this story: Joe Mayes in London at jmayes9@bloomberg.net, Katie Linsell in London at klinsell@bloomberg.net. To contact the editors responsible for this story: Shelley Smith at ssmith118@bloomberg.net, Mark McCord, Neil Denslow
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