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TNK-BP $1bn Eurobond shows the way for sovereign issue

February 4, 2010

TNK-BP, the Anglo-Russian petroleum joint venture, yesterday mandated British banks Barclays Capital and Royal Bank of Scotland, along with France’s Calyon to manage the issue of Eurobonds worth $1bn.

The Russian state is expected to shortly name a roster of banks to manage the issue of $3-5bn in Eurobonds in its first foray into the Eurobond market in over a decade.

Energy export monopoly Gazprom is expected to follows as Russian blue-chips become increasingly active in the Eurobond markets after international credit lines were shut down in the wake of the financial crisis.

Deputy Finance Minister Dmitry Pankin yesterday told Russia state-controlled corporates to hold fire for the sovereign issuance before going ahead with their own. “It would be logical for Russia to come to the market first, before state corporations,” Pankin told reporters at the Troika Dialog Russia Forum.

Demand for the TNK-BP bonds exceeded the supply, according to a statement from the company.

The 5-year $500m tranche was priced with a coupon of 6.250% and the 10-year $500 m tranche was priced with a coupon of 7.250%.

TNK-BP’s chief financial officer Jonathan Muir said that the company may use proceeds from the issue to finance day-to-day operations, including the capital investment programme and the refinancing of its short-term debt.


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