Bashneft Said to Seek Rate Cut as Russian Loan Margins RetreatStephen Morris
OAO Bashneft is seeking to reduce the interest rate on a $600 million loan raised earlier this year after other Russian borrowers negotiated lower debt costs, according to two people with knowledge of the request.
The oil producer has asked lenders to cut 65 basis points, or 0.65 percentage point, from the 235 basis-point margin more than benchmark rates it pays on the pre-export finance facility, said the people, who asked not to be identified because the terms are private. Bashneft raised the three-year secured debt in May, according to data compiled by Bloomberg.
The Ufa, Russia-based company also requested banks propose terms for a prepayment facility to replace the pre-export financing debt at a lower cost, said the people. In prepayment loans, the company promises to supply lenders a portion of its future oil production. Pre-export loans are backed by revenue from petroleum exports.
Bashneft spokesman Sergey Verezemskiy declined to comment on the repricing request.
Bashneft is seeking to reprice its debt after commodity producers OAO EuroChem and OAO GMK Norilsk Nickel cut their borrowing costs with new loans this year, Bloomberg data show. The companies shifted their financing from pre-export facilities secured on their export revenues, to riskier unsecured debt.
EuroChem replaced a $1.3 billion pre-export finance facility in August with an unsecured term loan of the same size, which pays a margin of 180 basis points more than the London interbank offered rate, Bloomberg data show. The Russian fertilizer maker has the same junk-level credit rating as Bashneft. Standard and Poor’s rates Eurochem BB and Moody’s Investors Service grades Bashneft an equivalent Ba2.
Norilsk Nickel raised a $2.3 billion unsecured loan last month with a 175 basis-point margin, the data show. That compares with a 225 basis-point margin its pays on a $1.5 billion pre-export loan raised in 2011.
OAO Gazprom Neft is currently seeking a $1 billion facility paying interest of 150 basis points more than benchmark rates, 25 basis points less than what it pays on a $700 million portion of a $1 billion facility raised in April.