A standoff between western banks and the Russian state-owned oil company Rosneft over who should pay Yukos's debts is throwing a shadow over Moscow's otherwise sunny corporate loans market.
A bad-tempered meeting on the issue in April between Rosneft officials and representatives of a banking syndicate headed by Societe Generale ended without agreement – and some bankers fear getting caught in the crossfire between Russian state officials and the remains of Yukos's former chairman Mikhail Khodorkovsky's empire.
The syndicate is seeking repayment of a $1 billion syndicated loan made to Yukos in November 2003, shortly after Khodorkovsky was arrested. When Yukos defaulted on the loan in December last year, the banks demanded repayment from suretyships (i.e. guarantees) extended by Yuganskneftegaz (YNG), once Yukos's largest production
subsidiary and now owned by Rosneft. After the rampage against Yukos by tax officials, in which the company faced demands for $25 billion in back taxes, YNG was auctioned by bailiffs in December last year and bought by an unknown finance company, Baikal – which was itself taken over by Rosneft a few days later.
The YNG suretyships provide for repayment of the entire amount outstanding, reported to be slightly less than $500 million. So do suretyships issued by Yukos's two other producing subsidiaries, Tomskneft and Samaraneftegaz.
Sources in the banking market say that when the syndicate pressed Rosneft for immediate repayment, they were urged first to seek payment from Yukos – either via the suretyships from Tomskneft and Samaraneftegaz, or by seeking recourse on other Yukos property, such as the Mazeiku oil refinery in Lithuania or other assets outside Russia.
A Rosneft spokesman said: "We are in talks with representatives of the creditors. No final decision has been taken by Rosneft on this issue."
While taking a firm line with the banking syndicate, Rosneft has also initiated a number of legal actions in Russia against Yukos. Rosneft is suing Yukos for $11 billion, alleging that transfer-pricing schemes caused financial losses at YNG between 1999 and 2003. Yukos responded in a statement describing Rosneft's claim as "ludicrous".
The situation is further complicated by an outstanding $1.5 billion loan, also made in November 2003, by Group Menatep, the holding company for Yukos's main shareholders, who are now either in prison or in exile. Societe Generale is the nominal lender.
The western institutions' enormous appetite for Russian risk may be judged from the fact that, despite Rosneft's
tough negotiating stance, and the renewed concerns about state attacks on business generated by the $1 billion back tax bill
sent to TNK-BP last month, they are
queuing up to lend even greater sums, at ever-tighter margins, to the largest oil and gas producers.
Deals expected shortly include a new $900 million syndicated facility for Gazprom, which was last month seeking to mandate arrangers. Such a loan would partly refinance some previous deals, possibly including a collection of loans to Gazprom in December last year – of $1.35 billion from Deutsche Bank in tranches due in five, seven and 10 years, and of $200 million each from ABN Amro and JP Morgan.
Another likely borrower is Transnefteprodukt, the state oil products pipeline monopoly, which is talking to banks about a debut $600 million syndicated loan deal to finance a pipeline from central Russia to the Primorsk terminal on the Baltic Sea.
Maturity
The wafer-thin margins on this year's deals show just how the Russian market has matured. ABN Amro, Citigroup and Calyon have been mandated by TNK-BP to arrange a $600 million, five-year structured bank loan with a record low Libor + 90bp
margin. The well-publicized tax demand on the company will probably make it even more determined to go ahead with the record-breaking pricing.
One banking source commented: "They [BP management] will do it, just to
show how strong they are."
On a $200 million, three-year unsecured deal being brought to the market for the state-owned pipeline monopoly Transneft, the borrower has achieved a margin of Libor + 115bp. Barclays Capital is the sole bookrunner and lead arranger for the deal. ABN Amro, Citigroup, Bank Austria and two other banks joined it before general syndication. The wider market reacted with scepticism to the tight pricing – and Barclays upped the fees from 35bp for a $25 million tranche to 55bp for a $30 million tranche.
Gazprombank, the state-owned bank closely linked to the gas company, achieved a slightly wider margin – Libor + 150bp – on a $650 million, three-year syndicated deal arranged last month by ABN Amro, Citigroup, Deutsche Bank and JP Morgan.
The tight pricing at the top of the Russian market has driven specialist commodity banks that pioneered syndicated deals for Russian oil and gas in the late 1990s into other sectors. Syndicated deals of between $50 million and $200 million are now being done regularly for second-tier companies in the metals, chemicals, fertilisers and forestry sectors, as well as to smaller oil producers such as Russneft. There has also been a growth of ECA-backed loans to these sectors over the past 18 months.