Rosneft’s second yuan-denominated bond issue is attractive to investors, Finam analyst Alexei Kovalev believes. In an article published in the newspaper ‘Vedomosti’, he commented on the oil company’s new placement of bonds in yuan.
The expert recalled that Rosneft bonds are one of the leaders in terms of average daily turnover and the number of transactions on the Moscow Exchange in the yuan segment.
According to Sergey Suverov, investment strategist at Arikapital Management Company, “in the absence of a sovereign borrower, Rosneft acts, in fact, as a quasi-sovereign and a benchmark for the entire market.”
As Ronald Smith, senior analyst at BCS World of Investments, noted, the placement was the largest among corporate bond issues in the Russian market in its entire history. The previous record also belongs to Rosneft: the debut issue of bonds worth 15 billion yuan (128.5 billion rubles at the exchange rate of the Central Bank on the day of placement against 163.95 billion rubles of the current placement) was placed by Rosneft on September 20 last year. The rate was at the level of 3.05% per annum.
Evgeny Mironyuk, an expert on the stock market at BCS World of Investments, in turn, pointed out that “the yuan is one of the few liquid and accessible alternatives to “unfriendly” currencies for transactions in most countries.” For Russian companies, yuan bonds are beneficial because of the low cost of borrowing relative to the dollar and the euro (the cost of borrowing in dollars and euros, according to him, is 5-8% per annum), and also because of the possibility of converting into “necessary to finance the current activity currency”, Mironyuk added.
According to Suverov, the high demand for Rosneft bonds and the relatively low coupon rate are explained by the high quality of the borrower: the company is the main supplier of oil to China. “Current long-term contracts completely exclude any currency risks for Rosneft,” the expert emphasized.
According to the company, at the beginning of 2022, Rosneft’s total supplies to China since 2005 amounted to 442 million tons of oil.
Vedomosti writes that now the local bond market in yuan is formed by 11 Russian companies. Rosneft accounts for 40% of the volume of placements, taking into account the new issue. Since August 2022, Russian issuers have issued bonds in yuan on the Moscow Exchange in the amount of about 74 billion yuan.
