Rosneft conducts secret placement, which may be a part of more complicated deal

Yesterday, on an unprecedented in scale and the most mysterious bonds placement in Russia took place. Rosneft suddenly, rapidly and, what is more surprising, successfully borrowed 625 billion rubles, sold its bonds to unnamed buyers. According to the Kommersant, that were big banks, in particular, VTB, which are going to get liquidity from the Central Bank under the security of bonds. The urgency and scope of the loan may have several explanations - from the immediate repayment of large loans to support its production and the privatization of state-owned package. Rosneft has already allocated the money between its subsidiaries that looks like a sign of the beginning of a more complex transaction.

Rosneft has held the largest in Russian history ruble bonds placement for 625 billion rubles. (11.5% of the total domestic market of corporate bonds) in a single day and in secrecy. The company took an hour for the collection of applications and successfully completed it, the only organizer of the placement was Rosneft’s subsidiary The Russian Regional Development Bank. The coupon rate on the 13 six-year bonds issues was 11.9%, which is lower even than the current yield of government bonds. Thus, yesterday the yield of federal loan bonds maturing in April 2021 was 12.2%. In the future, the rate on the Rosneft’s bonds will be tied to the base rate of the Central Bank plus 2.4 percentage points in the first two years, and then for another year - rate plus 1.4 percentage points.