Russian natural-gas monopoly OAO Gazprom has become the latest emerging-market borrower to take advantage of rising risk appetite to sell bonds on the international capital markets, raising the equivalent of $2.5 billion in a two-part offering.
The state-controlled firm on Wednesday issued a $1.25 billion, five-year bond and also raised 850 million euros through the sale of bonds that mature in February 2015. Both deals priced at par to yield 8.125%.
The underwriters -- BNP Paribas SA and Societe Generale SA for the euro tranche and J.P. Morgan Chase & Co. and Morgan Stanley for the dollar portion -- priced the offering tighter than initial guidance set Tuesday in the area of 8.75% for the euro part and 8.5% for the dollar tranche.
Roberto Sanchez-Dahl, an emerging-market bond manager with Federated Investors in Pittsburgh, said that the market was very satisfied with the company's performance and its ability to generate very strong earnings before interest, taxes, depreciation and amortization.
The deal comes hot on the heels of Hungary's 1 billion euros Eurobond placement Friday, which made Hungary the first European country that received a loan from the International Monetary Fund to return to global capital markets.
Following on from that, Poland raised $1.5 billion Monday through the reopening of its existing 6.375% bond maturing July 15, 2019.
"Judging by the recent new issuance wave coming out of Central and Eastern Europe and Russia, investors are steadily again becoming more comfortable taking on risk in the region that remains the 'weakest link' in emerging markets," said emerging market analysts at RBC Capital Markets in a note.
The company plans to use the proceeds from Wednesday's bond sale for debt refinancing and general corporate purposes.