(Refiles to correct byline)
By Sandrine Bradley
LONDON Oct 18 Russia's top companies, including
oil producer Lukoil and the country's fourth-largest
oil company Gazprom Neft, are raising new syndicated
loans to take advantage of falling loan pricing, bankers said on
Russia's second-biggest oil producer, Lukoil, is talking to
banks about a potential new loan of up to $1.5 billion and
Gazprom Neft is raising a second $1 billion loan after tapping
the market in April.
Lending to Russia is rebounding after falling during the
eurozone crisis, when rising bank funding costs made dollar
lending difficult for international banks and many pulled out of
Russia's dollar-based loan market.
Russian loan volume was 149 percent higher in the first nine
months of the year at $38 billion, compared to $15.3 billion in
the same period of 2012, according to Thomson Reuters LPC data.
The flow of new loans is expected to push volume higher by
year end, but returns for banks are tumbling as pricing falls.
Russia's loan market is relatively busy but it is driven by
repeat club loans from a small number of large companies looking
to lock in low loan pricing.
"We will see a handful of big Russian blue chips coming to
the market for cheap money," said one London-based banker.
Lukoil has asked banks for indications on the pricing and
tenor of a potential loan, and could raise up to $1.5 billion if
terms are sufficiently favourable.
The company is expected to be able to achieve highly
competitive pricing, which could come inside the anticipated
margin of 150 basis points (bps) for Gazprom Neft's upcoming $1
billion, five-year loan.
"Lukoil is a very desirable loan asset for banks, one would
expect razor-thin pricing. But if the price is not right there
will be no deal." a second banker said.
Like many large Russian loans, Lukoil and Gazprom Neft's
loans are expected to be sold on a club basis to a small group
of relationship banks rather than fully syndicated to a wide
range of participant banks.
Although banks' appetite for Russian risk is improving, the
universe of banks willing to lend to Russia is still smaller
than before the eurozone crisis.
"Ten years ago there was real syndication in the Russian
loan market. A small number of banks were selling down to a
variety of investors including Middle Eastern, Spanish and
Italian banks," said the first London-based banker.
"Where you used to see 250 banks in the Russian market now
there are only around 30."
Several other Russian companies are also seeking to reprice
existing loans that were agreed in the last 12 months.
Fertiliser company Uralchem is talking to lenders about
repricing a $220 million, five-year pre-export financing that
was agreed in January and priced at around 400bps.
Oil firm Bashneft is also negotiating a repricing
of a $600 million, pre-export financing facility from May and
oil giant Rosneft is considering repricing $4.6 billion of term
Lenders believe that Russian loan pricing will continue to
fall as it has not yet reached historic lows.
"Sadly banks will continue to support low pricing," said the
first London-based banker. "In fact both Gazprom Neft and Lukoil
have seen much lower pricing on previous deals than the current
benchmark in Russia."
Gazprom Neft signed a $630 million loan in September 2006
that paid 60bps, while Lukoil paid margins of 85bps-95bps on an
unsecured loan signed in April 2008.
Most recent Russian loan activity has been focused on the
country's corporate sector, but financial institutions are also
reducing borrowing costs on their loans.
Gazprombank signed a $500 million, three-year
club loan with a group of fifteen international banks, which
pays a margin of 140bps with fees, giving all-in pricing of
175bp. The deal replaces an existing one-year loan that was
arranged in October and was priced at 200bp.
Privately-owned Promsvyazbank also signed an oversubscribed
one-year $300 million, trade-related term loan that paid 175bps
and refinanced a $400 million, one-year facility signed last
October that was priced at 190bp.
(Editing by Tessa Walsh)