By Robert Hogg and Sudip Roy
LONDON, March 22 (IFR) - Gazprom is expected to return to the sterling bond market next week for the first time since 2013, having announced a mandate on Wednesday.
The Russian gas company will meet investors in Edinburgh and London on March 27-28 ahead of a potential intermediate maturity benchmark, likely to be seven to 10-years.
“They value the concept of investor diversification and having access to multiple markets,” said a banker close to the deal.
A deal in sterling would cement Gazprom’s return to its main international funding markets, which also include euros, US dollars and Swiss francs.
Last week, for example, Gazprom sold its first deal in the US dollar market since November 2014, a US$750m 10-year issue.
State-owned Gazprom last issued in the sterling market in September 2013 when it sold a £500m seven-year bond. That is trading at 278bp over Gilts, according to Thomson Reuters data.
“You don’t see a ton of emerging markets issuers in the sterling market,” said the banker, adding that Gazprom will offer investors yield.
One banker away from the deal questioned its rationale, arguing it was likely to come at a premium over Gazprom’s dollar curve.
“They have a sterling 2020 at G+280bp. Assuming a (new) 10 year at G+325bp, which is super tight, that is dollar mid-swaps plus 350-ish, or 90bp back of their dollar (curve).”
However the banker close to the deal said Gazprom was less interested in comparing pricing across different currencies than in what it can achieve in a specific market.
“What they’ve tended to do is look at each market individually and beat their benchmarks in that market,” he said.
Gazprom has mandated Deutsche Bank, Gazprombank, JP Morgan and VTB Capital as lead managers. The company is rated Ba1/BB+/BBB-. (Reporting by Sudip Roy, editing by Julian Baker)