Norilsk to meet investors amid hopes of Russian reopening – by Michael Turner (Reuters U.S. – May 14, 2014)

LONDON, May 14 (IFR) – Norilsk Nickel is meeting bond and equity investors in London on Monday, as market participants grow increasingly optimistic that some Russian borrowers might melt through the international fundraising freeze before 2016.

The Russian palladium and nickel firm, rated BBB-/BBB-, is not marketing a specific bond at the meetings, according to two of the sources, but giving fund managers an update. Barclays is arranging the meetings.

“My personal view is that they do not need to raise funds,” said an investor from a Swiss firm who has been invited to the event.

Still, Norilsk Nickel is a potential issuer as the firm has not been sanctioned by the West. Bankers say that investors are showing more interest in potential Russian supply.

“We’ve had some reverse enquiry about Russian corporates,” said one banker. “We’re a way off the market properly reopening but we’re having more interesting conversations than six months ago.”

No Russian issuer has come to the international market since Gazprom sold a US$700m one-year note on November 5.

Russian issuance came to an abrupt standstill after the US imposed its first round of sanctions in March 2014. And despite a small flurry of deals last June and July, not much has happened since, with the exception of the Gazprom deal and a small niche offering from Alfa Bank.

Other non-prohibited companies have not raised funds internationally, first as banks and investors gave all Russian entities a wide berth, and then because a collapse in the oil price in the second half of 2014 pushed funding costs to exorbitant levels.

However, with oil up 30% since the start of the year and a new ceasefire in place since mid-February between Ukraine and Russian separatists, Russian bonds have rallied hard in 2015. Norilsk’s 2020 notes are up 12 points year-to-date, trading around par or a yield of 5.59%, according to Tradeweb.

“If this rally catches on, more and more people are going to be sucked in so there will be demand [for a new deal],” said Jan Dehn, head of research at Ashmore. “The market is going to be very, very interested in this.”

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