Naftogaz placing seven-year bonds worth US$500 mln

Ukraine's oil and gas giant, NJSC Naftogaz of Ukraine, is now placing its seven-year bonds worth US$500 million at 7.625% per annum. "Naftogaz of Ukraine on November 4 successfully priced a seven-year eurobond for a US$500 million size. The senior unsecured bond is issued under 144A/Reg S format and carries an interest of 7.625% payable semiannually. The eurobond is (subject to, inter alia, the satisfaction of conditions precedent) to be issued by Kondor Finance plc for the sole purpose of making a US$500 million loan to Naftogaz," the company said on its website. The re-offer yield reflects a 127 bp premium to Ukraine's sovereign debt due in 2026, the lowest spread to sovereign achieved by Ukrainian stated-owned companies this year, it said.

The eurobond does not have a state guarantee. Fitch has rated Naftogaz at 'B' (with positive outlook), with notes also expected to be rated at 'B;' at the same level of Ukraine's sovereign rating. The orderbook peaked at almost 2.9 times oversubscription. Worldwide investors from the United States, the United Kingdom, Switzerland, Germany, and other EU member states; Asia or Middle East have participated in the offering.

"We are inspired with investors' high interest to Naftogaz' securities. Our efforts to reform the company and the Ukrainian gas market help us reduce our financing costs and compete more effectively," CEO of Naftogaz Andriy Kobolyev commented on the placement of the notes. The company expects to see the funds on November 8, following the completion of legal formalities. Citi acted as sole bookrunner on the issue. 

Citi acted as sole bookrunner on the issue. Freshfields Bruckhaus Deringer, AEQUO, White & Case, Avellum, Linklaters, Allen&Overy acted as legal counsels on the offering. In July 2019, Naftogaz had previously placed a three-year US$335 million eurobond issue, with the approximate spread to sovereign standing around ~150 bp, respectively.