Gazprom to begin second placement round of USD 'perpetual' Eurobonds

MOSCOW. June 7 (Interfax) - Gazprom Capital will begin an additional placement of local bonds on June 8 to replace the balance of Gazprom's perpetual dollar Eurobonds, the company said in an announcement.

The issuer can place up to 405,919 bonds with par value of $1,000 each. The maximum volume of additional placement is thus $405.9 million, which corresponds to the volume of Gazprom's "perpetual" Eurobonds in circulation after the company held their first replacement round at the beginning of the year.

The nearest coupon payment date for this issue is July 26. Initially, Eurobonds worth $1.4 billion were in circulation. In January, the company replaced about 70% of the issue with local bonds.

Applications will be collected starting 10:00 Moscow time on June 8 until 15:00 on June 19. The planned end date of the placement is June 22 or the placement date of the last bond. Payment for the bonds during their placement will be made in Eurobonds of the corresponding issue, the rights to which are accounted for by Russian depositories. Payments on "substitute" bonds are made in rubles at the exchange rate of the Russian Central Bank on the date of fulfillment of obligations.

Gazprom placed these Eurobonds in October 2020 (simultaneously with the euro tranche) with a yield of 4.6%. The first call option is provided in 5.25 years (January 2026). The structure of "perpetual" issues in dollars and euros assumes that coupons will be reviewed on this date and every subsequent 5 years. In 10 years after the placement, the step-up will be 25 basis points, and in 25 years, 100 basis points. During the placement, the company noted that the new Eurobonds as a hybrid instrument in the Gazprom group's financial statements under IFRS would be reflected in equity.

Gazprom partially replaced all Eurobond issues in circulation with local bonds. In March, Gazprom held the second round of replacing dollar Eurobonds maturing in March 2027 and Eurobonds in British pounds sterling maturing in 2024, and in April - dollar Eurobonds maturing in 2034. The company is now collecting applications for the second round of substitution of two issues of dollar Eurobonds maturing in June 2027 and 2031, as well as in francs with maturity in June 2027.