Rosneft Eurobond Should Follow Lukoil on Rating, Raiffeisen Says
OAO Rosneft (ROSN), the world’s biggest publicly traded oil company, should follow OAO Lukoil in selling Eurobonds after Standard & Poor’s lifted both to the same rating as the Russian government, Raiffeisen Bank International AG (RBI) said.
Lukoil is selling $1.5 billion of five-year bonds at a yield 255 basis points above the benchmark midswap rate and $1.5 billion of 10-year notes at 270, according to a person with knowledge of the plans who asked not to be identified because the information isn’t public. Russia’s biggest privately owned oil producer is tapping the market two days after S&P lifted its rating to BBB, the second-lowest investment-grade category. Rosneft’s upgrade followed yesterday.
“It makes more and more sense for Rosneft to issue soon,” Alexander Sklemin, deputy head of credit research at Raiffeisen, eastern Europe’s second-biggest lender, said by e-mail from Vienna. “This week’s rating action created a positive technical background.”
State-controlled Rosneft hasn’t sold Eurobonds since it completed the $55 billion takeover of BP Plc (BP/)’s joint venture in Russia last month. The company last sold foreign notes in November, raising $3 billion in five-year and 10-year securities. The yield on the 2022 bonds rose eight basis points today to 4.3 percent, the highest level this year.
Rosneft’s press service in Moscow declined to comment when contacted by Bloomberg News by e-mail today.
Russia’s government plans to sell $7 billion of Eurobonds this year, according to the budget plan.
“It makes sense for Russian investment grade-rated companies to issue paper before the mooted placement of the sovereign this year,” Sklemin said.
The yield on Lukoil’s dollar bonds due November 2020 added 9 basis points to 4.02 percent today, taking this year’s increase to 21 basis points, compared with a 37 basis-point advance in the average rate of emerging-market oil and gas companies, according to JPMorgan Chase & Co. indexes.
Lukoil had net debt of 0.2 times earnings before interest, taxes, depreciation and amortization in 2012, according to data compiled by Bloomberg. That compares with 1.2 times Ebitda for state-run Rosneft.
Lukoil appointed BNP Paribas SA and Citigroup Inc. as lead managers for the bonds.
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