Gazprom Seeks Return to Eurobond Market First Time This Year

  • Investor meetings planned in Paris, Frankfurt, London Oct. 5-7
  • Natural-gas exporter last sold Eurobonds in November 2014

Gazprom PJSC, the world’s biggest natural-gas supplier, may return to the international capital markets next week in an attempt to kick-start Russian Eurobond sales after an 11-month break.

The state-run company is looking to raise 1 billion euros ($1.1 billion) in bonds maturing in four to five years, according to a person familiar with the plans who asked not to be identified because the information is private. Gazprom will hold investor meetings in Paris, Frankfurt and London Oct. 5-7, another person said. Banca IMI SpA, JPMorgan Chase & Co. and UniCredit SpA have been hired to organize the meetings.

The sale would be Gazprom’s first abroad since it raised $700 million last November also marking the first benchmark-sized deal out of Russia since then. Russian companies have sold $564 million in foreign-currency bonds this year, down from about $42 billion in 2013 before sanctions blocked many companies from tapping international financial markets, according to data compiled Bloomberg.

“It is a tough global environment but Russian assets have held up well, so it is worth a try,” said Rohit Gadkar, who manages emerging-market assets at Trea Capital Partners SV in Barcelona including some Russian corporate dollar debt. “They are giving themselves some flexibility by doing an investor road show first, so they can always decide based on feedback whether to proceed.”

Gazprom, which has $1.7 billion of bonds to mature this year and is not facing sanctions, will market the deal on the back of a selloff in emerging markets spurred by uncertainty over U.S. Federal Reserve policy and concerns that China’s faltering economy will deepen a rout in commodities.

Gazprom’s Eurobond sale is subject to market conditions and the company’s funding plans, a person familiar with the deal said.

The average yield on corporate dollar bonds for developing nations rose more than 40 basis points since the Fed kept rates unchanged on Sept. 17, citing concern over China’s slowdown and the turmoil in financial markets, Bloomberg USD Emerging Market Corporate Bond Index shows. The yield on Gazprom’s 750 million euros of bonds due in February of 2021 rose 47 basis points to 5.87 percent this month.

“It would have been better to issue one month earlier,” said Lutz Roehmeyer, who oversees 1 billion euros in emerging-market debt as director of fund management at Landesbank Berlin Investment. “The emerging market is really hurt right now, so timing is really bad.”

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