MOSCOW (Reuters) - Russian aluminum giant Rusal (0496.HK) may place a debut Chinese yuan-denominated bond this year or next and use it for refinancing or payment to its Chinese raw material suppliers, its head of strategy said at the Reuters Russia Investment Summit.
Rusal, which had to restructure its debt pile in previous years after its profit was hit by low aluminum prices, was overtaken last year by China’s Hongqiao (1378.HK) as the world’s top aluminum producer.
Rusal would be the first Russian firm to issue a Panda bond, the name given to a renminbi-denominated bond sold in China by a non-Chinese issuer.
Other debt instruments Rusal is looking at include Eurobonds and the use of multi-currency bond program which Rusal previously registered in Russia, Oleg Mukhamedshin said at the Summit, held at the Reuters office in Moscow.
“There is a very good opportunity to place dollar instruments now, we see excessive liquidity and large demand. I think we will test the market in the nearest time, the window to raise financing in dollars is not bad.”
“Plus, we have received a credit rating in China and are in talks with Chinese regulators on entering the Chinese debt market. This is the so-called Panda Bond,” he added.
Mukhamedshin said it was too early to estimate how much the company would raise.
Russian lender VTB’s (VTBR.MM) investment banking business VTB Capital expects an increase in corporate Eurobond issues from Russia next year as growing confidence in the economy spurs corporate investment programs, it told the Summit earlier this week.
Rusal, whose net debt was at $8.3 billion at the end of June, has a credit facility from Russian banks, which it also plans to use in the second half of the year, it said.
Rusal needs to repay $1.2 billion of its debt to banks in 2017 and plans to start partial repayment ahead of schedule this year thanks to funds from the sale of its asset in Jamaica, a dividend payment from Nornickel (Norilsk Nickel) (GMKN.MM) and available credit lines, Mukhamedshin added.
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Additional reporting by Svetlana Burmistrova, Diana Asonova and Christian Lowe; editing by Elaine Hardcastle