Igor Mazepa: Ukraine’s natural gas holding Naftogaz raised USD 1 billion from Eurobond placement

Igor Mazepa, CEO of Concorde Capital investment company, comments Naftogaz placement of Eurobond

Ukraine’s natural gas holding Naftogaz placed two Eurobonds for a total value equivalent of $1bn, according to its July 12, 2019 official statement.

Naftogaz placed EUR 600 mln in 5Y bonds at 7.125% and USD 335 mln in 3Y Eurobonds at 7.375%. The company highlighted that the rates were much better than it was offered in November 2018. Recall, in November 2018, the company decided to postpone the Eurobond issue, citing “volatile markets.” – comments Igor Mazepa.

As Naftogaz mentioned in its official statement, now Company is “better placed to prepare for the next winter season by accumulating gas volumes in the underground gas storages.

Commenting the placement rates, Igor Mazepa says that Concorde Capital’s analytics find them in the middle of the range that they expected a week before. The spread to the sovereign curve for Naftogaz’ 5Y bond in euro is about 176 bps, while the spread of the 3Y dollar bond is 154 bps, they estimate. The spreads are in line with those achieved by Ukrainian Railway two weeks ago (155 bps over sovereign curve for its 5Y dollar bond). The amount raised is more than the company expected to raise from Eurobond placement, based on information about its draft financial plan provided by top management earlier. Therefor we could consider that Naftogaz Eurobond placement is successful – summarizes Igor Mazepa.