Report: Gazprom suspends external borrowing amid spat with Naftogaz - News Archive - PRIME Business News Agency - All News Politics Economy Business Wire Financial Wire Oil Gas Chemical Industry Power Industry Metals Mining Pulp Paper Agro Commodities Transport Automobile Construction Real Estate Telecommunications Engineering Hi-Tech Consumer Goods Retail Calendar Our Features Interviews Opinions Press Releases

Report: Gazprom suspends external borrowing amid spat with Naftogaz

MOSCOW, Aug 6 (PRIME) -- Russias Gazprom suspended its external borrowing program earlier this year because of a deepening legal dispute with Ukraines Naftogaz over gas supplies, Reuters reported Monday citing three banking sources.

A London court in June froze the gas giants assets in Britain at the request of Naftogaz. The Ukrainian company was seeking to enforce an earlier arbitration ruling from Sweden that ordered Gazprom to pay it U.S. $2.6 billion.

The British verdict is likely to have spooked Western banks that traditionally work with Gazprom because it raises the possibility that any new funds the company might raise via London could also be frozen, one of the sources said.

Gazprom is still able to raise funds on the Russian market, recently testing investors appetite with a 40 billion ruble bond, but the situation means it faces higher borrowing costs and prolonged regulatory uncertainty, the bankers say.

Gazprom, which is on the hook to repay $15.2 billion in external debt this year, had planned to start meeting investors to test their appetite for a potential sterling Eurobond in the middle of June, a Russian banker involved in that deal said.

However, the deal was cancelled days before the British courts June 18 announcement, the banker said.

He said that the decision was made as the relationship between Moscow and the West grew increasingly tense because of U.S. sanctions against Russian businessmen and a row over former spy Sergei Skripals assassination attempt on British soil. Russia has denied any involvement.

Two other London-based bankers said the decision to call off the Eurobond issue was also taken as Gazprom adopted a cautious stance ahead of the London ruling.

One of the sources, who all declined to be named because they were not authorized to speak on the matter, said that Gazprom had also planned to sell Eurobonds in euros and Japanese yen in the autumn, but that those plans had stalled too. Meanwhile, one of the banks that works with Gazprom put a loan for the Russian firm on hold until the situation around its finances in the West became clearer, the same source said.

Gazprom declined to comment.

As I understand it, settlements with foreign banks done via London are affected, another banker said.

A third source, citing a banker who works with Gazprom, said Gazprom had stopped making any payments through banks in Britain.

However, the London courts ruling does not prevent the company from servicing outstanding debt, a lawyer familiar with the process said.

CHANGING TACK

Gazproms original plan had been to borrow 417 billion rubles externally this year.

It is currently building two new pipelines to southern Europe and China, and preparing to start construction of the Nord Stream-2 to Western Europe under a projected investment program of 1.3 trillion rubles this year.

Gazprom has a sufficient cash cushion to deal with its costs but western financing is a cheaper alternative for the company, the bankers said. In March, prior to the London court ruling, Gazprom raised 750 million Swiss francs via a 5-year Eurobond where UBS was the only Western bank involved, and another 750 million euros in an 8-year Eurobond arranged by Deutsche Bank and JPMorgan along with three Russian banks.

In May, Gazprom raised 600 million euros via a loan from Credit Agricole.

Deutsche Bank and JP Morgan declined to comment on Gazproms external borrowing operations.

Other banks that have worked on Gazproms external financing programs, such as Societe Generale, Commerzbank, UniCredit, UBS, BNP Paribas and Sumitomo Mitsui Banking Corp, also declined to comment.

Credit Agricole could not immediately comment. Nomura and Intesa Sanpaolo did not reply to Reuters requests.

Naftogaz said that Gazproms failure to comply with the original decision of the Stockholm court was creating problems and it was better for Gazprom to pay the $2.6 billion it owed.

End

06.08.2018 19:35
 
 
Share |
To report an error select text and press Ctrl+Enter
 
 
Central Bank Official Rate
1W 1M 1Y
USD
EUR 77.3832 -0.3012 26 sep
USD 65.8244 -0.3350 26 sep
Stock Market Indices
1D 1W 1M 1Y
MICEX
rtsi 1169.04 +0.52 18:50 25 sep
micex 2444.22 +0.58 18:50 25 sep
Stock Quotes in RUR
1D 1W 1M 1Y
GAZP
gazp 160.65 +1.04 18:32 25 sep
lkoh 4886.50 +2.23 18:32 25 sep
rosn 458.85 +2.64 18:32 25 sep
sber 195.95 -1.41 18:32 25 sep
MICEX Ruble Trading
1D 1W 1M 1Y
USDTD
EURTD 77.5600 -0.8850 14:59 25 sep
USDTD 65.7650 -0.7025 17:44 25 sep