By Robert Smith

LONDON, July 24 (IFR) - Abengoa's high-yield bonds have plummeted after the company announced that its convertible and exchangeable bonds will now carry the same guarantees.

The Spanish energy firm held a conference call with investors on Thursday evening, with management arguing that the convertible and exchangeable bonds not having the same level of guarantees as the high-yield bonds has created an opportunity for investors to take "irrational positions" on its credit default swaps.

The company has decided to stop this by giving convertible and exchangeable bonds the same guarantees as its high-yield bonds.

Abengoa's five-year CDS has widened throughout the week, bid at an upfront cost of 20.375% on Monday morning and blowing out to 28.75% on Thursday afternoon before the call took place.

That means an investor seeking to buy five-year protection for a 10m notional trade would have to pay 28.75 percentage points upfront, in addition to a 500bp coupon for the life of the contract.

Abengoa's high-yield bonds have not reacted well to the news on Friday morning. The 375m 7% 2020 note tumbled seven points from a cash price bid of 88.50 to 81.50, according to Tradeweb prices. This equates to a yield of more than 12%.

The bond was issued at 97.954 to yield 7.50% in April, meaning it is now trading 16 points below its reoffer price.

Abengoa's CDS has deteriorated further on Friday morning, now bid at an upfront of 30.25%. The company's shares have also dropped more than 13%.

(Reporting by Robert Smith, editing by Alex Chambers, Julian Baker)