Rosneft Determined Not to Come Cheap
// Pushes Back Eurobond Issue as Investors Lose Faith in Debt Market
Rosneft, which was supposed to close the book today on applications for $2 billion in Eurobonds, has decided to wait until the end of the year to issue the bonds, citing the current unfavorable state of the worldwide debt market.
Peter O'Brien, the head of a group of financial advisors for the president of Rosneft, said that the company is not in desperate need of the money from the Eurobonds to refinance the $22 billion that it borrowed from a consortium of lender banks in March to finance its acquisition of Yukos assets. The company has until September 2008 to pay off or refinance its remaining $11 billion debt on the March loan: the rest of that debt has already been paid off using funds that Rosneft received as a Yukos creditor ($9.2 billion) and another bank loan for $3.25 billion approved by Rosneft's board of directors on Friday. In addition, the company has announced the opening of a credit line with VTB for 8.4 billion rubles. Rosneft also has $25-26 billion in long-term debt to pay off, which experts believe will not be a problem for the company.
Experts link the company's decision to delay the issue of the Eurobonds to the weak state of the American and European debt markets. "There are no problems in Russia, but foreign funds are reconsidering their positions with regard to bonds from the same developing markets that Russia deals with," said DVS Investments portfolio manager Dmitry Dudkin. "Now the attention of investment funds is focused on bonds with very high credit ratings," he continued.
Rosneft is not the only Russian issuer whose debts foreign investors are currently not prepared to buy cheaply. A week ago, the Bank of Moscow also delayed issuing Eurobonds, and yesterday VTB-24 announced that it would do the same. Both banks cited "the volatile situation on the international market" in their decisions.
Natalia Skorlygina, Denis Rebrov, Yulia Chaikina, and Igor Orlov
All the Article in Russian as of July 17, 2007
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