Russia's Sibur Sees Benevolent Market Fueling Ruble-Bond Sales

  • Producer not ruling out additional issue of 10 billion rubles
  • Sibur set to revise budget for its biggest investment project

Russia’s largest petrochemical producer, Sibur Holding PJSC, isn’t ruling out doubling a sale of ruble bonds by the end of May if the market remains positive, according to its chief financial officer.

“The market is benevolent,” CFO Alexander Petrov said in an interview in Moscow. “If oil prices remain roughly at the current levels, positive conditions will remain for several months, I think, until the end of spring.”

Sibur is offering as much as 10 billion rubles ($148 million) of bonds this week, with a coupon of about 10.5 percent, according to bankers, who asked not to be identified.

The ruble is the second-best performing currency in emerging markets this year, rebounding with oil prices after hitting an all-time low in January. That has helped kindle investor interest in ruble bonds and prompted Russian issuers to come to market this month.

Fitch Ratings revised Sibur’s outlook to negative earlier in March, citing an expected “material” increase in its leverage in 2017 through 2019 on the back of low and volatile petrochemical pricing. The company is spending billions of dollars on its West Siberian project, known as ZapSibNeftekhim.

Sibur plans to revise the project’s budget by the end of June due to currency volatility and will probably lower it, Petrov said. Fitch estimated its spending will account for 80 percent of the company’s 2016-2020 capital expenditures. Investment in the plant was initially set at $9.5 billion.

Sibur has no plans so far to sell new Eurobonds or to buy back its $1 billion issue due in 2018 under current market conditions, according to Petrov. Sibur may decide on refinancing options in the second half of the year, he said.