Gazprom Follows Norilsk Nickel With Russia's Second EurobondBy
Gazprom sells 1 billion euros of three-year notes at 4.625%
Norilsk Nickel raises $1 billion in seven-year bonds at 6.625%
Gazprom PJSC, the world’s biggest energy exporter, is returning to international markets for the first time in almost a year, taking advantage of improved investor sentiment for developing-nation assets to sell its shortest-dated debt in euros.
Russia’s biggest natural-gas producer raised 1 billion euros ($1.1 billion) in three-year notes at 4.625 percent, less than the rate on the secondary market, according to a person familiar with the deal who asked not to be identified because the information is private. Gazprom began offering the bond at between 5 percent to 5.125 percent, the person said.
“I expected a better yield,” said Clemens Hansmann, a money manager in Vienna at Gutmann Kapitalanlage AG, which oversees 7 billion euros of assets and decided not to participate in the deal. “Investors were waiting for supply. It helped to tighten the yield.”
Gazprom joined GMK Norilsk Nickel PJSC this week in selling the first benchmark Eurobonds by Russian companies this year as speculation the U.S. will delay raising interest rates spurred a rally in emerging markets. Russian companies sold $564 million in foreign-currency bonds in the first nine months of the year, down from about $42 billion for the whole of 2013 before western sanctions over the country’s role in Ukraine’s military conflict blocked many borrowers from international markets, according to data compiled by Bloomberg
Neither Gazprom nor Norilsk Nickel have been sanctioned. Norilsk Nickel, the nation’s biggest mining company, raised $1 billion in seven-year notes at a yield of 6.625 percent, compared with a rate of 5.6 percent on its October 2020 bond. The yield on Gazprom’s 900 million euros of bonds due in July 2018 rose 14 basis points on Thursday to 4.68 percent and has averaged 5.4 percent this year.
The company was considering between three- and five-year notes at investor meetings earlier this week, according to Peter Schottmueller, who helps oversee emerging-market debt at Deka Investment GmbH. He didn’t take part in the sale as the yield guidance tightened.
An easing in the conflict in eastern Ukraine buoyed investor sentiment after 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.
“Investors are feeling sort of encouraged from an apparent easing of tensions in Ukraine,” said Giuliano Palumbo, a Milan-based money manager who helps oversee $3 billion in emerging-market debt for Arca SGR. “This in turn could cause sanctions to Russia to be reduced or perhaps canceled and this in turn could push appetite for Russian corporates.”
Banca IMI SpA, JPMorgan Chase & Co. and UniCredit SpA are managing Gazprom’s deal.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- In One Tweet, Kylie Jenner Wiped Out $1.3 Billion of Snap’s Market Value
- The Two Words That Will Help Get an Airline Upgrade Over the Phone
- Snap CEO Evan Spiegel Got $638 Million in Year of Firm's IPO
- Apple Plans Upgrades to Popular AirPods Headphones
- Los Angeles Cracks Down on Out-of-Control Hollywood Party Houses