Up to 7.8% per annum in dollars: which bonds kept Freedom’s “Hold” rating

Freedom analysts maintained their recommendations on dollar-denominated bonds of Ithaca Energy, LATAM Airlines, Fortescue and Medco Energi. The expected annualized return over the holding period ranges from 5.8% to 7.8%, depending on the issue. Experts believe the companies retain the ability to service their debt; however, asset acquisitions, lower flight load factors, and difficulties selling iron ore require investors’ attention.

Ithaca Energy: extension of financing reduces refinancing risk

Freedom takes a neutral view of the latest news from Ithaca Energy and maintains a “Hold up to 2 years” rating on the IAECN 8.125’29 issue maturing on October 15, 2029. The expected return over the holding period is 6.7% per annum, and the yield to maturity at the indicative offer price is 7.2%.

The company agreed to amend the terms of a $1.8 billion secured credit facility. After the amendments take effect, the final maturity will be extended to December 31, 2032, and pricing terms will improve.

According to analysts, the longer financing term reduces the risk of having to refinance this facility at the same time as developing Canadian assets and executing the UK investment program.

However, the acquisition of the Canadian business for $860 million will require additional investment. Drilling costs for West White Rose are estimated at about $100 million annually during the ramp-up to target volumes through 2029. The Terra Nova well restoration and efficiency improvement program in 2027–2028 will require about $350 million for the acquired stake.

Freedom forecasts net debt to EBITDA at about 0.9 in 2027 and about 1.0 in 2028–2029. Such leverage remains comfortable, but depends on meeting the production and investment schedule.

LATAM: international flights support the business, domestic markets constrain growth

For LATAM Airlines bonds LTMCI 7.875’30 and LTMCI 7.625’31, analysts maintained a “Hold up to 2 years” rating. The expected return over the holding period is 7.1% and 7.4% per annum, respectively. The main positive signal in September was that international passenger traffic rose 8.8% year on year, outpacing capacity growth of 7.8%. This means demand for international travel grew faster than seat supply.

However, the opposite situation persists in domestic markets. In Q3, the group’s total passenger traffic increased 5.5% to 40.13 billion passenger-kilometers, while capacity rose 7.7%. Load factor declined 1.7 percentage points year on year to 83.7%. The number of passengers carried reached 23.53 million, up 2.7%.

According to experts, an improvement in load factor compared with the previous quarter does not by itself eliminate the risk of pressure on transportation yields: some of the changes reflect seasonality. Freedom maintains its forecast of net debt to EBITDA at about 1.4 at the end of 2026, followed by a decline to 1.0 in 2027 and 0.8 in 2028.

Fortescue: sales difficulties increase risks, but the balance sheet remains resilient

Analysts view Fortescue’s preliminary results negatively for the credit profile. Nevertheless, the rating for FMGAU 4.5’27 has been maintained at “Hold to maturity,” and for FMGAU 6.125’32 at “Hold up to 2 years.” The expected return is 5.8% and 7.1% per annum, respectively.

In Q1 of fiscal year 2027, ended September 30, iron ore shipments fell 6% year on year and 11% versus the previous quarter to 46.8 million tonnes. Sales totaled 42.9 million tonnes—3.9 million tonnes less than physical shipments. The company attributes the divergence to ongoing negotiations on the commercial terms of supplies to China.

The average realized price for hematite ore fell 10% year on year to $80 per dry tonne. Cash decreased from $5.1 billion at the end of June to $3.2 billion, while net debt rose from $0.9 billion to $2.8 billion.

Experts believe inventory build-up temporarily ties up cash, while less favorable pricing terms may have a more lasting impact. At the same time, a strong balance sheet, the ability to cut dividends, and the absence of significant near-term maturities continue to support the company’s resilience.

Medco: new gas projects expand opportunities, but the deal value is unknown

For the MEDCIJ 8.625’30 issue, issued by Medco Cypress Tree, Freedom Broker maintains a “Hold up to 2 years” rating. The expected return over the holding period is 7.8% per annum. The minimum lot indicated in the review is $250 000 in face value.

Medco Energi announced an agreement to acquire a 10% non-operated interest in four production sharing contracts in Indonesia. The portfolio combines producing assets, development projects, and exploration blocks.

Analysts view the deal as positive for the operating business, but preliminarily neutral for the credit profile. Producing assets may generate cash flows after closing, and new projects may support long-term production. However, the purchase price, sources of financing, and additional investment commitments have not yet been disclosed. Freedom Broker maintains a stable credit outlook and expects net debt to EBITDA at 1.9–2.1 in 2026–2028.

How to interpret the stated yields

The issue parameters are provided based on indicative quotes as of October 14, 2026. The expected return over the holding period reflects analysts’ assumptions about changes in interest rates and credit spreads—additional return for issuer risk. It differs from the coupon rate and yield to maturity.

All estimates are before taxes and fees and do not guarantee the actual result. For issues rated “Hold up to 2 years,” the stated horizon also does not mean the bonds mature in two years.

Not an individual investment recommendation.