6 Feb 2023 15:44

Gazprom places 'substitute' bonds totaling $761.9 mln to replace Eurobonds maturing in Feb 2026

MOSCOW. Feb 6 (Interfax) - Gazprom Capital has placed "substitute" bonds totaling $761.9 million as part of replacing Eurobonds maturing in February 2026, whose rights are recorded by Russian depositories, with local debt securities.

According to the company's statement, the share of actually placed bonds among the overall number of securities subject to placement totaled 60.95%.

According to Gazprom Capital's statement, payment could be rendered in Eurobonds of the corresponding issue, as well as in cash, for the company's new local bonds. The dollar-denominated Eurobond issue was paid in local bonds totaling $610.5 million and in cash at $151.4 million.

The law that permits Russian companies to issue "substitute" bonds allows for their payment in Eurobonds, as well as in cash, provided that the intended use of the funds is to acquire Eurobonds

The coupon rate for the issue is 5.15% per annum, and the next payment is due on February 11. There was $1.25 billion in outstanding Eurobonds prior to the placement.

Gazprom has been successively replacing Eurobonds, whose rights are accounted in the Russian infrastructure, with local debt securities since September 2022. As part of the transactions, the company has partially replaced five issues of dollar-denominated Eurobonds, one issue of pound-sterling-denominated Eurobonds, and four issues of euro-denominated Eurobonds with local bonds.

Gazprom in January 2023 replaced two issues of "perpetual" Eurobonds in dollars and euros, as well as dollar-denominated issues maturing in February 2028 and August 2037, with bonds issued under Russian law.

The "substitute" bonds must have the same terms and conditions as the Eurobonds being exchanged in terms of the amount and timeframes for payment of the coupon yield, maturity, and the nominal value. Meantime, settlements on the securities will be remitted in rubles at the exchange rate of the Central Bank of Russia (CBR) on the date of the respective payments.

Exchanging Eurobonds for local Russian bonds is the only way for investors to receive coupon and par value payments for their bonds held in Russian depositories, Famil Sadygov, Gazprom CFO and deputy chairman of the executive board, said previously. Investors who have not submitted replacement requests on time will still be required to receive payments through foreign clearing systems, which have not permitted payments to Russian investors since last March, Sadygov explained.