ADVERTISEMENT

Sasol Bonds Sink and Yields Surge on Rising Chemical Plant Costs 

Sasol Bonds Sink and Yields Surge on Rising Chemical Plant Costs 

(Bloomberg) -- Optimism about Sasol Ltd.’s giant Lake Charles chemicals project has turned to disappointment for bond investors.

Yields on the Johannesburg-based company’s dollar securities climbed the most since September on Wednesday after it said that costs associated with Louisiana-based plant would be 50% higher than estimated, at about $12.9 billion. Higher borrowing costs may add an extra burden on the company as it increases capital expenditure.

Sasol Bonds Sink and Yields Surge on Rising Chemical Plant Costs 

The yield on $750 million of notes due 2028 jumped 12 basis points to 5.31% by 11:07 a.m. in Johannesburg, the most in a day since the bonds began trading in September. The securities had rallied, with the yield reaching a record low on Monday, on expectations the much-delayed Lake Charles project was nearing completion.

Sasol’s shares slumped as much as 15%.

To contact the reporter on this story: Colleen Goko in Johannesburg at cgoko2@bloomberg.net

To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Robert Brand, Marton Eder

©2019 Bloomberg L.P.