OAO Transneft, Russia's state-owned oil-pipeline operator, will sell at least $1 bln of seven-year bonds at the lowest-ever rate for a Russian company.
Moscow-based Transneft cut the yield premium on the securities to 55 basis points more than the dollar mid-swap rate, a benchmark for borrowing, from an initial spread of 60 basis points, said a banker involved in the deal. Credit Suisse Group and Goldman Sachs Holdings Inc. are managing the sale, which will be completed today. „No Russian company has been able to attract such cheap money for such a long maturity,” said Pavel Pikulyev, a credit analyst at Trust Investment Bank in Moscow. „Transneft is benefiting from a lack of available debt.” High energy prices means Russia, the world's second-largest oil producer, doesn't need to raise capital by borrowing. The scarcity has stoked investor demand for bonds issued by Russian state-owned companies, driving the yield premium on gas producer OAO Gazprom's bonds to 83 basis points, more than half the level it was two years ago, according to ING Groep NV prices. Dollar-denominated debt sold by Russian companies returned 7.5% over the past year, according to JPMorgan Chase & Co. indexes. By contrast, European investment-grade securities averaged returns of 1.1% in the same period, Merrill data show. Russia has also become more attractive as the ruble gained 7.4% against the dollar in the past 12 months. The economy, spurred by surging oil revenue, is projected by the International Monetary Fund to grow 6.5% this year.
Transneft, which manages the world's largest oil pipeline system, is raising the money to help build an oil pipeline to the Pacific Ocean. The project will cost more than $11 billion, according to a company prospectus. Moody's Investors Service rates Transneft's bonds A2, its sixth-highest investment grade ranking, the banker said. Standard & Poor's rates the debt BBB+, two levels lower, the banker said. Non-investment grade debt is rated below BBB- by Standard & Poor's and Baa3 by Moody's Investors Service. Transneft's yield premium is less than previous low of 80 basis points that OAO Sberbank, Russia's biggest lender, sold its five-year bonds in November, according to MDM Bank in Moscow. Sberbank's debt is rated the same as Transneft's. A basis point is 0.01 percentage point. The premium on Gazprom's $1.75 billion of 9.625% bonds due in 2013 is 83 basis points more than the mid-swap rate, down from 250 basis points two year ago. Gazprom is the world's largest natural gas producer. „It's state-owned companies whose credit profile benefits from the increasing fiscal strength of the Russian government,” said Mikhail Galkin, head of fixed-income research at MDM Bank in Moscow. „Investors feel safe with state-owned companies.” OAO Gazprombank, the banking unit of Gazprom, said February 19 it plans to borrow as much as $3 billion in international markets this year. OAO Rosneft, the state-owned oil producer, may sell as much as $4 billion of securities before June, bankers familiar with the deal said. (Bloomberg)