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Investors ready wallets for Russia's Norilsk Nickel
September 1, 2015 / 11:13 AM / 2 years ago

Investors ready wallets for Russia's Norilsk Nickel

* Company meeting investors early September

* Potential US$500m deal being considered

* Investors eager for new Eurobond

By Michael Turner

LONDON, Sept 1 (IFR) - Norilsk Nickel is set to receive a warm reception from investors this month as it begins meetings ahead of potentially the first benchmark-sized deal from Russia in nearly a year.

The Russian mining company, rated BBB- by Standard & Poor’s and Fitch, is due to go on a roadshow in early September to update investors on its recent performance and strategy.

The company does not have any immediate funding needs, but “continues to see international capital markets as an important part of its funding mix and will remain opportunistic”, according to a statement released on Friday.

One source said last week that the firm could seek to raise about US$500m from a new deal, if interest is big and markets supportive. That would be the biggest deal from a Russian issuer since Gazprom sold a US$700m one-year bond last November.

While Norilsk Nickel has plenty of cash on its balance sheet, Sberbank analysts said the company has US$1.3bn in short term debt and expected high payments to equity holders. “It may look to refinance via capital markets,” said the Russian bank in the research note.


If investors’ initial reaction to the roadshow is anything to go by, Norilsk may find the time is right to raise debt.

“If anyone in Russia can print at the moment, it’s Norilsk Nickel,” said a London-based investor due to meet with the company next week. “Possibly everyone is underweight Russia, and Norilsk has been one of the main beneficiaries of the events in the country.”

Norilsk Nickel, like many Russian exporters, has gained from the weak rouble. The firm has also cut costs and improved production.

Operating profit at the company stood at US$2.4bn for the first six months of this year, up by US$400m year-on-year and US$600m more than the same period of 2013, according to its financial statements. This is despite nickel prices falling 35% this year, according to Thomson Reuters Eikon data.

Furthermore, there is “no chance” that Norilsk will be added to the list of Russian companies under financial sanctions, the investor said.

A second investor in London said that the low supply of deals from across the CEEMEA market will work in Norilsk’s favour.

“There has been far less issuance, so the technicals from a supply and demand perspective look pretty good,” the investor said.

The concession the issuer will have to pay depends on what the money will be used for, said the first investor.

“If it is for new money, then there will be a bit of a premium, but if it’s just for refinancing, then it should be okay [to raise debt with a minimal price concession],” the investor said.

Norilsk Nickel last printed a bond in October 2013, when it placed a US$1bn 5.55% 2020 note. That bond is trading at a yield of 6%, according to Thomson Reuters data. The company also has a US$750m 4.375% 2018 Eurobond outstanding, quoted at a yield of 5.19%.

Barclays, Citigroup, ING, Societe Generale and UniCredit are arranging the investor meetings across Europe, the US and Asia. (Reporting By Michael Turner; editing by Sudip Roy and Julian Baker)

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