A 15% interest rate normally draws in investors like honey draws bees. But Sable Offshore's $775 million loan, carrying a 15% interest rate, is proving difficult for JPMorgan Chase to sell. The loan is even being sold at a discount - 97 cents on the dollar - yet demand remains weak.
JPMorgan is the lead bank trying to sell this loan. Jefferies Financial Group is helping as a joint bookrunner, a bank that assists in selling the debt.
Sable now only borrows $775 million. The first deadline for investor commitments was June 23, 2026.
A second deadline was set for June 26, a Friday. As of June 29, the loan was still being marketed with no deal closed.
One analyst described the situation as "like a used car sold at a big discount because buyers worry about hidden problems." Sable faces legal challenges to its right to drill in California. President Donald Trump used a Cold War-era authority to override California's objections, but the fight is not over. Investors may worry that the company could lose access to its oil fields.
Get your free investing masterclass bonus when you join Market Briefs, our free daily newsletter
The loan also has an unusually short maturity - only two and a half years. That means Sable must repay quickly, which raises the risk of default. The company restarted drilling in March 2026 after more than ten years without pumping oil.
Starting up after a long pause brings extra costs and uncertainty. All these factors make lenders cautious.
Sable needed this new loan to refinance an existing loan from Exxon Mobil that was about to come due. The new deadline for that existing loan is July 24, 2026. To gain more time, Sable paid Exxon Mobil $30 million to postpone the due date of its current loan after missing the June 23 and June 26 deadlines for the new loan.
The new loan from JPMorgan includes a requirement for Sable to pay down part of the balance over time. That lowers the risk for investors because the debt shrinks gradually. Sable bought a few extra weeks, but the pressure is on.
Sable acquired the offshore oil field from Exxon Mobil in 2023, inheriting a site that had been idle for over a decade. Restarting production required significant investment in infrastructure and regulatory approvals. The company's legal battle with California's coastal commission adds a layer of uncertainty that makes lenders wary, even with a high interest rate and a discounted price.
Pay-as-you-go repayment plans can help protect lenders from a total loss if a borrower runs into trouble.
Subscribe to Market Briefs, our free daily newsletter, and claim your bonus investing masterclass