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Gazprom Is Said to Make $1.3 Billion Debt Payment in Dollars

Some holders of a $1.3 billion Gazprom PJSC bond due Monday said they received payment in dollars.

Gazprom Is Said to Make $1.3 Billion Debt Payment in Dollars
A Gazprom logo in Russia. (Photographer: Andrey Rudakov/Bloomberg)

Some holders of a $1.3 billion Gazprom PJSC bond due Monday said they were fully repaid in dollars, two days after Russian President Vladimir Putin gave issuers the option of paying back foreign-currency debt in rubles.

Bondholders said they received cash to pay off the bonds Monday, according to people with knowledge of the payments, who declined to be identified because they aren’t authorized to speak publicly about the matter. The company began the process of repaying them last week, before Putin’s decree, a person with knowledge of the matter said at the time. A spokesperson for the company didn’t immediately respond to requests for comment.

The bond paid Monday was among those snapped up at distressed prices last week as Wall Street investors eyed buying opportunities amid Russia’s invasion of Ukraine. Goldman Sachs Group Inc. and JPMorgan Chase & Co. loaded up on Russian corporate bonds as hedge funds also scouted targets, Bloomberg reported. 

Although Gazprom last week was already in the process of servicing the dollar debt maturity and a coupon payment on another bond, there was growing concern that a Saturday decree from Putin allowing borrowers to repay their debt in rubles would disrupt the payment. It underscores just how uncertain investors have been since Russia’s invasion of Ukraine prompted the U.S. and its allies to slap multiple sanctions on Moscow, and Moscow’s numerous capital controls introduced within the past two weeks.

Adding to the confusion, Russia has also said creditors in countries that haven’t imposed sanctions may be able to receive the payment in foreign currency, provided companies get special permission. The countries deemed “unfriendly” include the U.S., the U.K., Japan and European Union members. Bloomberg spoke to bondholders based in the EU.

It’s possible, however, that Gazprom’s payment process was too far along to be impacted by Putin’s recent directives. The payment was meant to be transferred to bondholders by the settlement bank on March 4, a day before Putin’s decree. While the bonds are Gazprom’s, they were issued by Gaz Capital SA, a special purpose vehicle incorporated in Luxembourg. 

Creditors of a Russian telecommunications company, Yandex NV, said they, too, had received a payment due Thursday on a $1.25 billion bond due 2025. The company is now in talks with bondholders to determine how to handle the potential early redemption of its bonds.

The Russian oil and gas producer Rosneft told investors it had begun the repayment process Mar. 3 for a $2 billion bond that matured on Sunday, according to IFR, and that the payment would come through on March 9, after public holidays in Russia the two days before.

©2022 Bloomberg L.P.