Norilsk Nickel Revives Russia Eurobonds With Benchmark Note

  • Nation's biggest miner offers 7-year bonds yielding 6.625%
  • Gazprom sold last benchmark Eurobond in November 2014

GMK Norilsk Nickel PJSC, Russia biggest mining company, is raising $1 billion in the first benchmark-sized Eurobond out of the country in almost 11 months.

The seven-year note is being offered yielding 6.625 percent, down from initial guidance of about 7 percent, according to a person familiar with the deal who asked not be identified because information is private. The yield on its dollar bond due in October of 2020 fell four basis points to 5.626 percent on Tuesday, 67 basis points below this year’s average.

The Eurobond is the first sale by Russian company since Gazprom PJSC raised $700 million in a one-year note last November. While international penalties for the country’s involvement in the military conflict in eastern Ukraine have frozen many companies from selling debt abroad, neither Norilsk Nickel nor Gazprom, which is meeting investors this week about a possible offering, have been sanctioned.

“The revised guidance remains attractive relative to where secondary bonds of Norilsk Nickel are trading,” Andreas Fischer, a Zurich-based money manager at Credit Suisse Group AG, said by e-mail. “The fact that they are private and non-sanctioned as well their solid credit fundamentals puts them in a strong position relative to other Russian names to come to the market.”

A fragile cease-fire has held between Ukraine and pro-Russian separatists in the country’s east since President Vladimir Putin met with his Ukrainian counterpart Petro Poroshenko, German Chancellor Angela Merkel and French President Francois Hollande in Paris last week. The leaders agreed on a withdrawal of weapons and that Ukraine would pass a law allowing the elections to take place in areas held by the rebels legally under Ukrainian standards, Hollande said after the talks on Friday.

Gazprom is looking to raise 1 billion euros ($1.1 billion), according to another person familiar with the company’s plans. The world’s biggest energy exporter is considering a maturity of three to five years, Peter Schottmueller, who helps oversee emerging-market and international debt at Deka Investment GmbH, said by phone from Frankfurt on Tuesday, after attending an investor meeting.

The Norilsk Nickel sale is being managed by Barclays Plc, Citigroup Inc., ING Groep NV, Societe Generale CIB and UniCredit SpA.

"The appetite for Russian risk is reviving,” Dmitry Dudkin, the head of fixed-income research at UralSib Capital in Moscow, said by e-mail. “Logically the next sale should be from those who are not sanctioned like closely held mining companies, fertilizer makers and maybe telecoms."

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