Russia’s leading petrochemical company Sibur raises $208mn with bonds issue at record low yields
Russia’s leading petrochemical producer Sibur Holding has successfully closed the order book for its BO-01 and BO-02 exchange-traded bond issues, worth RUB10bn ($139mn) and RUB5bn ($69mn) respectively, that pay the lowest ever corportate bond yields, the company said in a statement on May 21.
As bne IntelliNews has reported, Russian bonds are in vogue at the moment as they combine rock solid fundamentals with high yields in an otherwise close-to-zero fixed income rate world. Central banks around the world have slashed rates to next to nothing to counter the double whammies of an oil price shock and the coronavirus (COVID-19) pandemic. That has left bond investors hungry for yield and thin picking to choose from.
Sibur’s final semi-annual coupon rate was fixed at 5.50% per annum, which is the lowest coupon among market placements by Russian corporate issuers historically, but still a decent return in the current environment.
The par value of the bonds is RUB1,000 ($14.1) each. The offering price is 100% of the par value. With a coupon period of 182 days, the bonds have a tenor of 10 years and a put option after 2.5 years, the company said.
Sibur is something of an investor darling.
The company reported a mild fall in revenues of 7.8% year on year in the first quarter of this year, which were far better than the industry average, as its bottom line was cushioned by the production of ZapSibNeftekhim petrochemical complex (ZapSib) that came online earlier this year. bne IntelliNews profiled the plant last year in the article “Plastics in the snow” as construction was coming to an end. Investors are impatiently awaiting the company’s IPO which is still on, but only when market conditions improve, Sibur’s management tells bne IntelliNews.
In the meantime investors have to make do with the company’s bonds. The placement enjoyed a strong demand from investors with the issue two and half times oversubscribed, reaching around RUB45bn, the company reports.
Leading Russian public and private banks, institutional investors and asset managers, brokers and retail investors participated in the placement.
“We keep a close eye on opportunities to optimise our debt portfolio, and now see the market as favourable for ruble bond offerings, with the aim of diversifying our borrowings and reducing the weighted average ruble borrowing rate,” member of the management board and managing director for economics and finance at Sibur Alexander Petrov said. “The proceeds will be used to refinance existing debt. Strong investor appetite attests once again to Sibur’s robust financial policy and our reputation as a reliable borrower, which is underpinned by high credit ratings from the leading rating agencies.”
The placement was organised by Gazprombank and Sberbank CIB, with Gazprombank also acting as the placement agent.
The technical listing of the bonds on the Moscow Exchange will take place on 28 May 2020, and they are expected to be included in the Level 2 List.