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Friday, 20 October 2017

Pragmatic Gazprom drawing in the crowd

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Gazprom is proving its bond market credentials once more after garnering strong demand with a new five-year euro issue.

The state-owned Russian company, rated Baa1/BBB/BBB, has already generated an order book in excess of €3.1bn, according to a source, with investment-grade buyers understood to be driving the trade.

The issuer is seeking a minimum amount of €750m but could raise a touch more.

Initial price thoughts of 4.000-4.125% suggest a new issue premium of 40-50bp on a spread basis, though bankers away from the deal expect that to tighten, especially given the good early reception to the deal.

“The only CEEMEA issuer to have access in any market,” said one banker away from the deal. “They’ve always shown themselves to be mature. While aggressive in strong markets, they’re pragmatic in tougher markets and usually pay the price to get the deal done.”

The company is a well-known name in euros, with a well-defined curve. Its 3.755% March 2017s were at Z+240bp, according to the leads; its Feb 2018s at Z+250bp; and its 3.389% March 2020s at Z+260bp.

The five-year interpolation is at 252bp over mid-swaps, while the guidance levels translate to 291-303bp over mid-swaps.

Bank of America Merrill Lynch, Deutsche Bank, Gazprombank and JP Morgan are the leads on the Reg S only deal, which is expected to price later today.

<For real-time pricing and capital markets coverage, go to: www.ifrmarkets.com (subscription required)>

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