Russian Companies Line Up Eurobonds as UBS Sees Dozen New Salesby
Global Ports joins Otkritie, O1 in picking banks for offerings
Eurobond sales this year have almost reached 2015 total
Russian companies are turning to Eurobond markets to seize on falling borrowing costs in what’s shaping up to be one of the busiest months for issuance this year.
Global Ports Investments Plc, which operates container terminals in Russia, picked six banks including JPMorgan Chase & Co. for a possible sale of seven-year bonds that are marketable in the U.S. The mandate comes days after private lender Bank Otkritie started investor meetings in Europe and Asia for an offering of as much as $700 million of debt, while O1 Properties is planning a debut deal.
Renewed appetite for higher-yielding Russian assets has opened a way for companies to raise funds abroad, challenging a drought in sales that followed U.S. and European sanctions over the Ukraine conflict. While the borrowers this month aren’t listed under penalties, the stigma attached to the country choked issuance across the board in 2014 and 2015. Bond sales in 2016 have almost reached last year’s total and up to a dozen new Eurobonds may come out of Russia by year-end, according to UBS AG.
“Outside of sanctioned entities, we have a very healthy pipeline to put to work, mainly corporate deals,” said Stefan Weiler, London-based head of debt capital markets for central and eastern Europe, the Middle East and Africa at JPMorgan Chase & Co., the third-biggest underwriter of emerging-market bonds this year. “It will be a mixture including buybacks.”
September is ripe for emerging-market issuance generally as borrowers seek to lock in lower costs before the Federal Reserve resumes monetary-policy tightening. For Global Ports, this would be the second offering of the year. The yield on its notes due January 2022 has fallen 69 basis points to 6.18 percent since the April sale.
Companies including Gazprom PJSC, Evraz Group SA and Novolipetsk Steel PJSC raised about $4 billion in 2016, still about one tenth of volumes in 2013. Half of those sales came in June alone.
The Russian government ventured into Eurobond markets by mandating a state bank with its first sale since sanctions in May, raising $1.75 billion. Fertilizer producer EuroChem Group AG last month also hired underwriters for a potential sale.