Gazprom's 30-year dollar bond sold on August 08 was almost three times oversubscribed, as the Russian quasi-sovereign took advantage of a rare window in turbulent global markets, a syndicate official said on August 09.
Nicky Darrant, director of CEMEA syndication at ABN AMRO, one of the two banks marketing the bond, told Reuters order books had closed at $3 billion, allowing Gazprom to sell $1.25 billion instead of the planned $1 billion.
The bond had a coupon of 7.288 percent with an issue price of par, offering a spread of 225 basis points over Treasuries. US investors bought 69 percent and 31 percent was sold into Europe, he said.
"Yesterday a total of 15 deals priced. It's a testament to Gazprom's profile and credit strength that they can price during a time when only US high-grade names were accessing the market," Darrant told Reuters in an interview. "When we priced the deal the entire market was rallying so we caught that wave and got a book that was almost three times oversubscribed."
He said August 08 (Wednesday) had been the second busiest day in terms of volume in the new dollar issue market this year and the fifth largest ever as US corporates like Citigroup, Merrill Lynch and Kraft Foods sold billions of dollars worth of bonds.
A Indonesian mobile phone operator also sold a $100 million bond but the deal was smaller than expected and in terms of maturity much shorter than Gazprom's 30-year issue.
"Clearly yesterday was a window, a lot of people had been queuing up and waiting to take advantage of that. That window has closed again so the timing was good," Darrant added.
Gazprom had roadshows for the bond at the end of August but decided not to go ahead with the sale at the time as financial market turmoil deepened on the back of escalating worries over the US subprime markets and banks' losses linked to that.
Investors said the bond had offered them a good premium relative to the company's existing 2034 issue, which is trading about 180 bps over US Treasuries.
The bond sold on August 08 performed well on August 09, traders said, the spread tightening one bp tighter to 224 bps over Treasuries. After trading as high as 101.5 points in price, it has settled at 110.75.
Darrant said Gazprom had been keen to go ahead with the bond, especially because a hefty pipeline of issuance is expected from eastern European corporates from September onwards.
A postponed multi-billion dollar bond from another Russian quasi-sovereign Rosneft is also likely to go ahead later this year after being postponed following a July roadshow, he said. ABN AMRO is part of the Rosneft syndicate as well.
"The emerging markets pipeline is very strong. Traditionally emerging corporate new issuance supply is backend loaded towards the third and fourth quarters and add to that the issues that have either been delayed or have stepped back from the market," he said.
Darrant forecast a few new names to tap the market along with three or four frequent issuers. Also he noted, it is unclear how much longer credit market turmoil will continue. August 09 (Thursday) saw a renewal of the hefty selloff in global financial markets as BNP Paribas joined a list of casualties of the US subprime mortgage crisis.
"We are not out of the woods yet," he said. "A question mark hangs over how long it will take before the volatility subsides.
Comments
Comments are closed.