Amount:$500m Reg S/144A
Maturity:23 September 2024
Issue/fixed reoffer price:100
Spread at reoffer:mid-swaps plus 182bp, US Treasury 1.25% August 2024 plus 175.3bp
Launched:Tuesday, September 16
Payment date:September 23
Joint books: Gazprombank, Goldman Sachs, JP Morgan, Sberbank
We decided not to postpone the deal and to go ahead with the bookbuilding process. The result in the end shows that decision was justified.
We now have an investment grade rating from all agencies, which improves our cost of funds, and the overall environment, US Treasuries in particular, meant that a good cost of funds was available across the whole market. Russian performance in particular has been impressive.
There were several factors behind our decision to come back to the bond market. We don’t have a real need for funding, but it was an excellent opportunity to improve our credit portfolio.
Also, we are able to use the funds for payments for contracts for some projects that have been completed. We’re committed to remaining active in capital markets.
A higher oil price is actually slightly beneficial for us, although it does raise costs for our chemicals business. But really, we don’t expect it to have a long-term effect and I don’t think it really affected investors’ perceptions of how likely we are to pay back the bond.
We’re very pleased with the result. We saw a new issue premium of about 5bp. Severstal’s new bond was trading at 3.25% and it’s better rated.
Some of Sibur’s older bonds are quite squeezed because they bought back $200m, so the secondary curve isn’t a great guide.
Continental Europe 26%
Asia/Middle East/Africa 15%