TEXACO <TX> EUROBONDS UNQUOTED AT MARKET OPENING
Eurobonds for Texaco Inc subsidiaries
were unquoted this morning as traders assessed the implications
of the company's shock weekend decision to file for bankruptcy
under Chapter 11 of U.S. Bankruptcy laws, eurobond dealers
said.
    The decision to file for bankruptcy follows a court
decision that it had to post an 11 billion dlr bond to continue
its court battles with Pennzoil Co <PZL>.
    One head trader at a U.S. Securities house said, "I don't
want to be obstructive, but there genuinely is no market in
Texaco bonds at the moment. Everyone is stunned by the decision
(to file for bankruptcy) and can't really believe it."
    One dealer noted that Texaco subsidiaries have outstanding
eurobonds totalling over three billion dlrs out of total
borrowings of some 6.8 billion dlrs.
    He added that many of the fixed interest eurobonds - dollar
straights - had been trading "basis only" for some time prior to
this weekend's news. This means traders could quote a two way
price for the bonds but would not be bound to trade them. Any
trades would be negotiated.
    He said that recently there appeared to have been some
speculative buying of the bonds from the U.S. But that European
investors had been overall sellers.
    Dealers noted that under the Chapter 11 filing noteholders
will receive no interest payments.
    Texaco also has eurobonds outstanding which are convertible
into Texaco Inc common stock - known as convertibles. Trading
did not open in these issues either. One convertible dealer
said, "We're waiting to see the result of today's court hearing."
Texaco is applying today in the Texas courts for relief from
having to post the court bond.
    Texaco shares were being indicated by over the counter
share dealers here at around 26 to 28 dlrs compared with
Friday's close in New York of 31-7/8 dlrs.
    Pennzoil shares were indicated at 85 to 87 dlrs compared
with Friday's New York finish of 92-1/4 dlrs.
 REUTER
