DUBAI/LONDON- The issuer of $500 million in bonds arranged by Glencore to pre-pay Kurdish oil is seeking a delay of the debt repayment as lower oil prices hurt the Kurdistan regional government's revenue, according to sources familiar with the situation.

The bonds, due in 2022 and carrying a 12% interest rate, were issued by a special purpose vehicle called Oilflow and were used by commodities giant Glencore to pre-finance the purchase of oil from the autonomous Kurdish region (KRG) in Iraq.

Oilflow said last week in a filing on the Cayman Islands Stock Exchange, where the bonds are registered, that the borrower will be holding talks with bondholders "to explore the possibility of potential amendments to the trust deed and certain other documents" following the global coronavirus outbreak and drop in crude prices.

One of the sources said Oilflow was essentially asking for delays in debt repayments, as lower oil prices generate much less revenue, with every cargo selling at a third of the price at which it sold in January.

A second source said KRG - which is the debtor - wanted to delay principal amortizations.

A KRG official did not immediately respond to a request for comment and Glencore declined to comment.

Maples Group, which worked as legal adviser and listing agent for the bond deal, did not respond to a Reuters query on the current state of the discussions with bondholders.

Glencore and rivals such as Trafigura and Vitol have in recent years lent the KRG money they have borrowed from banks and investors, to be repaid in oil.

Oil prices plunged last month after the collapse of a deal between international oil producers on March 6 sparked a market share war between oil titans Saudi Arabia and Russia.

The amortizing bonds were issued in January 2017 and were arranged by Pareto Securities. Their yield spiked this week to over 50% from around 10% in early March, sources said.

(Writing by Davide Barbuscia; Editing by Emelia Sithole-Matarise) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))