Комментарии Андрея Соловьева, руководителя управления рынков долгового капитала ВТБ Капитал, для IFR

1 июля 2020

Sibur slides in under 3%

Petrochemicals company Sibur tested demand for sub-3% financing when it priced a US$500m July 2025 note on Tuesday at a yield of 2.95% as Russian corporates continue to enjoy the benefits of a strong local bid.

One banker said there was a heavy Russian interest for the bond, although some international investors were priced out given the lack of value compared with other similarly-rated corporates.

The allocation of notes into Russian hands was not disclosed in the deal statistics.

Andrey Solovyev, global head of DCM at VTB Capital, said that international investors actively participated in the placement, and that there was also demand from Continental

Europe and Asia.

But others said it looked like a typical Russian corporate deal, in which the local bid was crucial.

One banker away thought demand had come up a little short of expectations, with the bond around twice subscribed.

"It was a bit of a lacklustre book, and the Gazprom book wasn't big either," he said.

Gazprom hit fair value with its US$1bn seven-year note, earlier in June. Orders peaked at US$2.25bn, but demand dropped back to US$1.75bn at pricing.

"I don't think it's a function of credit quality in Russia," said the banker away. "These are very well positioned corporates with strong profiles but Russia trades very tight. So from a relative value perspective there's not much upside to get out of the jurisdiction."

Sibur started marketing the no-grow bond at 3.125%-3.25%. Based on the company's curve, a second banker away put fair value at IPTs at around 2.80%.

"I guess they will target a 2.75% coupon, but 2.875% is probably the right price," he said.

Sibur landed the note a touch short of that yield. "The
coupon on the placement was at historically [low] levels for a five-year dollar-denominated Eurobond issue among Russian corporates," said Solovyev.

Some investors saw more value elsewhere.

"I think there are better opportunities out there for better rated issuers," said Uday Patnaik, head of EM debt at LGIM after price thoughts were announced.

"For example, I would prefer holding/buying Equate Petrochemical (Baa2/BBB), which is higher rated and offers a better yield than the proposed Sibur new issue."

Sibur is rated Baa3/BBB-/BBB-. Moody's affirmed the rating, with a stable outlook, on June 25, stating that Sibur's rating can sustain the moderate deterioration in the company's financial profile with debt/Ebitda increasing to above 3.0x in 2020.

"The company will be well-positioned to recover its key metrics in 2021-22, owing to its strong business and liquidity profile, and successful completion of active investment stage in early 2020 that will contribute incremental Ebitda in 2020," said Moody's.

Sibur's new issue was priced at par, but traded a touch down in the aftermarket, seen by the second banker at 99.75-99.875 on Wednesday.

Citigroup, Gazprombank, Goldman Sachs International, JP Morgan and VTB Capital were lead managers.