The $13.1 billion loan to Russian state gas company Gazprom last September was the largest financing ever arranged for a Russian borrower. As such, it marks a bold new milestone for what’s feasible in the resource-rich country.
ABN Amro, Citigroup, Credit Suisse First Boston, Dresdner Kleinwort Wasserstein (DrKW), Goldman Sachs and Morgan Stanley underwrote the deal equally as mandated lead arrangers, with ABN AMRO and DrKW acting as bookrunners.
Size, however, is not everything. “Everyone focuses on the amount – which was certainly large – but there were two highlights for me”, says Roland Boehm, managing director of global loans at DrKW for eastern Europe, the Middle East and Africa. “First, the $13.1 billion was raised on an unsecured basis, which would not have seemed possible just one year before this facility. Secondly, $2.5 billion was taken to the broader syndicated loan market where it set a new pricing benchmark.”
Of the $2.5 billion term loan that was sold by the six banks, half was a three-year maturity and half a five-year maturity.
“A financing like this underscores the sophistication that leading Russian corporates have attained in dealing with the markets, and their ability to access different types of financing across the capital markets,” says Boehm. “I think we will continue to see high demand in the market by top companies for unsecured debt, and see more names come to the market as the Russian syndicated loans market matures.”
Gazprom used it to buy a 72% stake in Russian oil producer Sibneft from Millhouse Capital, an investment group that includes Roman Abramovich. “This was very much a highly strategic move by Gazprom to extend its remit beyond gas and into the oil sector. Sibneft is one of the largest oil companies in Russia and very much strategically a good fit”, says Boehm.
“This financing really underscores the amount of liquidity available to Russian blue chip companies in this sector and ... the amount of funds banks are prepared to lend to do the right transactions in Russia,” he adds.
Despite the size of the facility, none of the six mandated lead arrangers had concerns about the ability of Gazprom, which is rated Baa2/BB+/BB+, to repay, given “the context of the transaction and the size of Gazprom”, says Boehm.