SOCAR places Eurobonds worth $1 billion
By Nigar Orujova
Azerbaijani state oil company SOCAR placed Eurobonds in the amount of $1 billion for 10 years on the CEEMEA market (Central & Eastern Europe, Middle East and Africa) with 4.75 percent annual revenues.
"This is the second international transaction conducted by SOCAR to strengthen its investment base," the company reported.
SOCAR placed its debut Eurobond issue worth $500 million in February 2012.
"The mandate for the issue of securities of the company this year was granted in late February, and their two-day presentation was held in London on March 4-5," the statement reads.
Initial yield of ten-year bonds (rating at Ba1/BB + / BBB-) was determined within 4.90 percent under the guidance of Deutsche Bank.
"This initial level has been lowered to 4.80 percent, and the final level totals 4.75 percent," the statement reads.
Total volume of orders exceeded the volume of Eurobonds by three times. Applications were submitted by 245 investors in a total amount of $3 billion.
SOCAR head Rovnag Abdullayev said that revenues from the second SOCAR Eurobonds placement will partially cover fulfillment of the commitment on external borrowings.
"Core capital from the new Eurobonds placement will be aimed on amortization of earlier raised funds, while the other part is envisaged on the increasing oil extraction volume from the fields developed by SOCAR independently," Abdullayev said.
According to Abdullayev, 2012 and 2013 Eurobonds placement showed SOCAR's top indicators on the international financial markets. About 41 percent of the SOCAR Eurobonds were bought by European investors, while 32 percent bought by the UK, 25 percent by the U.S. and two percent by other investors.
87 percent of Eurobonds were purchased by asset management companies, five percent - by banks and retail investors, four percent - by hedge funds, three percent - by insurance and pension funds, and one per cent - by others.
"While the corporate bond issuance, for disposal on the local market, these high positions should be preserved. Therefore, during realization process, transparency should be guaranteed and all the international norms and requirements in this sphere should be obeyed," he stressed.
Moody's has assigned a provisional (P)Ba1 rating to corporate bonds to be issued by SOCAR. The outlook on the rating is stable.