OAO Rosneft will place 400 billion rubles ($6.1 billion) in ruble bonds today as Russia’s largest oil producer plans to repay loans raised for deals and growth.
Rosneft completed collecting bids for the sale in 1 hour on January 23 and set the coupon at 11.9%, the Moscow-based company said in a statement.
Russian government bonds due in June this year yield 14.65%, according to data compiled.
Sanctions on the Kremlin-led company related to Russia’s actions in Ukraine have restricted Rosneft’s access to international debt markets.
At the same time, falling oil prices have reduced the availability of cash to service debts raised for deals that made Rosneft the world’s biggest publicly traded oil producer by output.
The largest of the acquisitions was $55 billion for TNK-BP in 2013.
Rosneft may utilize a similar plan as in December, when lenders purchased 625 billion rubles of its bonds and used them as collateral to get refinancing at the central bank, Alexey Bulgakov, a fixed-income analyst at Sberbank CIB, the investment arm of Russia’s largest lender, said in comments.
“The company, meanwhile, used the funds raised in December to finance $7 billion in external debt payments during the month,” he said.
Rosneft must repay $19.5 billion in debt this year and more than $8 billion in each of 2016 and 2017, it said in an October 29 presentation.
The company repaid a $7 billion bridge loan raised for the TNK-BP deal in December.
It’s scheduled to repay another $7.1 billion bridge loan next month, according to data compiled by Bloomberg.
Rosneft press service declined to immediately comment on the potential buyers, the reasoning, or choice of instrument for the bond placement when contacted by Bloomberg.
“Rosneft is effectively replacing cheap foreign-currency debt with expensive, short-term local funding, which significantly worsens the company’s debt structure,” Bulgakov said.
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