Lukoil Said to Defer International Loan Amid Russian Sanctions

OAO Lukoil postponed a plan to get a dollar-denominated loan from international banks this year, according to three people with knowledge of the matter.

Russia’s second-largest oil producer was seeking to borrow at least $1 billion through a pre-export finance facility, said one of the people, who asked not to be identified because they’re not authorized to speak about it.

International loans to Russian companies have evaporated as U.S. and European sanctions targeting specific businesses stifle lending to all borrowers. While Moscow-based Lukoil is on the U.S. blacklist, the penalties don’t restrict its access to financial services, according to the Treasury Department.

“It a particularly challenging time for companies in the energy sector to raise capital,” said Rachel Ziemba, the London-based director for emerging markets research at Roubini Global Economics. “The risk premium investors would demand to take that on make that quite expensive.”

Officials at Lukoil in Moscow could not be reached for comment outside office hours.

Russian companies paid an average interest margin of 232 basis points, or 2.32 percentage points, more than benchmark rates for internationally syndicated loans this year, according to data compiled by Bloomberg. That compares with an average spread of 210 basis points during the same period in 2013.

Loans to Russian companies slumped to $2.7 billion in the three months ending Sept. 30, the least for any quarter in at least five years, according to data compiled by Bloomberg. No loans in any currency other than the ruble were offered in October, the first month this has happened since at least 2008, the data show.

The sanctions imposed by the U.S. on Sept. 12 prohibit Lukoil from exporting goods, services or technology in support of exploration or production for Russian deepwater, Arctic offshore, or shale oil projects. Lukoil may seek financing from Russia’s National Wellbeing Fund, Leonid Fedun, vice president at Lukoil, said at an oil and gas conference in Moscow Oct. 22.

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