Scorpio Tankers is looking to take on another piece of unsecured debt with the issuance of its fourth "baby bond" as a public company.
The issuance of five-year notes is nominally earmarked for $25m, but is likely to be larger if market conditions prove suitable, with a target coupon rate at 7%.
The deal, announced in a securities filing on Tuesday, is led by US investment bank B Riley FBR.
Scorpio's fundraiser comes only a week after the world's largest product tanker company retired a previous issue of baby bonds — so-called for their small denomination of $25 — at maturity.
That issuance was for $53.75m and had an interest coupon of 6.75%. The amount is likely to be a good approximation of what Scorpio actually hopes to raise in the new deal.
Emanuele Lauro-led Scorpio had previously paid back two other baby bonds for a total of $160m during its decade as a public company.
Scorpio said in Tuesday's filings that it currently has a little more than $3bn in debt, the highest among public tanker owners.
President Robert Bugbee has publicly earmarked debt reduction as a high priority for the New York-listed owner in the coming months, to try to become more attractive to "long only" institutional investors.
However, the entire tanker market faces a projected period of weakness in the second half of 2020, extending into 2021 and perhaps longer based on inventory destocking and demand destruction from the coronavirus pandemic.
Proceeds from Tuesday's issue are earmarked for general corporate purposes and would be another piece in the owner's liquidity arsenal.
A top shipping specialist for B Riley FBR is Ernie Dahlman, co-founder of the former boutique shipping bank Dahlman Rose.
A client connection goes back to Bugbee's days as president of the former OMI Corp, when the owner brought Dahlman into some of its first capital markets deals.
