Naftogaz Places $1bn In Eurobonds
Ukraine’s Naftogaz has sold more than $1bn in Eurobonds, placing the company in a better position to stock up on gas supplies ahead of the coming winter.
The national gas concern said on July 12 it had placed €600mn ($676mn) in euro-denominated five-year bonds with a yield-to-maturity (YTM) of 7.125%, and a further $335mn in US dollar-based three-year bonds with a 7.375% yield. More than 120 investors from the UK, other EU countries, Asia and South America purchased the notes, it said, with the book oversubscribed by two and a half times.
“The level of interest generated by the issue shows investor confidence in Ukraine and is a recognition of our efforts to make Naftogaz a transparent and reliable company,” Naftogaz CEO Andriy Kobolyev said.
Naftogaz, which controls Ukraine’s largest gas fields and its national gas pipeline and storage system, among other assets, posted a net profit of hryvnia 11.6bn ($451mn) in 2018, on the back of hryvnia 256.3bn ($10bn) in revenues.
“Having raised the fund on attractive terms, Naftogaz is now better placed to prepare for the next winter season by accumulating gas volumes in underground gas storage,” it said.
In early July it said it needs at least 20bn m³ stored by the end of the injection season, meaning about 2.2bn m³/month need to be injected by the end of September; although it has not said how much of the 13.5bn m³ in store is owned by third parties. Gas prices are at long-term lows at Europe's hubs this summer, which will help it meet the target.
Naftogaz had planned to hold a Eurobond sale in November last year, but cancelled the offering citing weak market conditions. The placement on July 12 follows other successful bond issues over the past month by Ukraine’s government and its national railway operator.
Naftogaz expects to receive funds generated from the sale on July 19, while legal formalities are completed. Citibank and Deutsche Bank were hired as the issue’s lead managers, while Freshfields Bruckhaus Deringer, AEQUO, White & Case, Avellum, Linklaters and Clifford Chance acted as legal advisors.