Press about us

30 March 2017

Gazprom makes big sterling return

Lucy Fitzgeorge Parker
Gazprom went for size with its sterling market return on Wednesday, pricing the second largest deal ever in the currency from an emerging markets borrower.
The Ba1/BB+/BBB- issuer raised £850m of seven year funding at a yield of 4.25%. That was comfortably inside initial price thoughts of 4.375%-4.5% and in line with guidance of 4.375% area.
Despite the price tightening, however, bankers on the deal reported no orders dropping from the book, which finished at £1.7bn.
The majority of allocations went to local UK investors, who took 61 % of the deal. A further 16% went to Russia, 11% to Switzerland, 11% to continental Europe, 1.5% to Asia and less than 1% to the US. In total, more than 150 accounts participated.
Andrey Solovyev, global head of DCM at VTB Capital, said leads had been particularly concerned to keep UK investors engaged during the pricing process.
“Even though some may have thought the final price was quite tight and the size quite large, they all stayed in the book,” he said.
Comparables for the deal were thin on the ground, given the lack of Russian sterling bonds outstanding.
Gazprom’s only outstanding deal in the currency, a £500m 5.338% September 2020 issued on the borrower’s last outing in the market in 2013, was trading at a cash price of around 107.5 this week, according to bankers on the new issue.
That equated to a yield of around 3.06%. Bankers away from the deal quoted a level of closer to 2.9% for the bond.
The only other outstanding Russian sterling issue is Russian Railways’ 2031s, which were trading at around 5.4% this week.
“It is very difficult to talk about fair value in the sterling market,” said a banker on the deal.
“There is a very limited number of investors, so they are able to dictate pricing.”
Bankers away from the deal were less convinced that the final level was tight. “I’d call it reasonable to fairly generous,” said one.
Deutsche Bank. Gazprombank, JP Morgan and VTB Capital acted as bookrunners on the deal, which was the largest from an emerging market issuer in sterling since Mexico’s £1bn 100 year in March 2014.
David Greenbaum, head of CEEMEA corporate and FIG bond origination at Deutsche Bank, said the trade was part of Gazprom's ongoing effort to maintain access to different pools of investors. “It is something they have been resolute about as a strategy,” he said.
Sterling is the fourth currency the Russian gas producer has tapped in the past 12 months, following issues in Swiss francs, euros and dollars.
Solovyev said the deal was unlikely to spark of rush of imitators, however. “We wouldn't expect to see a lot of names from Russia in this market,” he said. The sterling market is probably limited to a handful of top quality Russian issuers: the largest corporates and the quasi sovereigns.”
Corporate Communications VTB Capital

The information and opinions contained within VTB Capital research reports are prepared by research analysts associated with JSC VTB Capital, VTB Capital plc and their non-U.S. affiliates (each such entity, a “VTB Group entity,” and all such entities collectively, the “VTB Group”). The information, analytic tools, and/or models referenced herein (and any reports or results derived from their use) are intended for informational purposes only. VTB Capital has no obligation to update this information and may cease provision of this information at any time and without notice. The information and opinions described herein may be based on VTB Capital research reports that have already been published and made available to research customers. Accordingly, members or clients of the VTB Group may have acted upon or used the information or conclusions contained in this research report, or the research or analysis on which they are based, before its publication.


This material does not constitute nor is it intended as an offer, inducement, promotion or solicitation for the purchase or sale of securities, investments or other financial instruments. Neither the information contained in the report nor any future information made available with the subject matter contained in the report will form the basis of any contract. This material is not intended to constitute an investment recommendation as defined by Article 3(1) (35) of Regulation (EU) No 596/2014, and related rules and regulations (each as amended). VTB Capital is not acting as a fiduciary. VTB Capital does not provide, and has not provided, any investment advice or personal recommendation to you in relation to any transaction and/or any related securities described herein and is not responsible for providing or arranging for the provision of any general financial, strategic or specialist advice, including legal, regulatory, accounting, model auditing or taxation advice or services or any other services in relation to the transaction and/or any related securities described herein. Accordingly, VTB Capital is under no obligation to, and shall not, determine the suitability for you of any transaction described herein. You must determine, on your own behalf or through independent professional advice, the merits, terms, conditions and risks of any transaction described herein. Any reference to past performance of securities or other financial instruments is for informational purposes only and does not imply or indicate future results.


VTB Group entities do and seek to do business with companies referenced in research reports. Thus, investors should be aware that the VTB Group may have a conflict of interest that could affect the objectivity of this research report. Disclosures on the companies referenced in this report can be obtained by accessing the following webpages:

Research disclosures webpage -

Investment Recommendations disclosures webpage


Whilst every care has been taken in preparing the reports, no research analyst, director, officer, employee, agent or adviser of any member of the VTB Group gives or makes any representation, warranty or undertaking, whether express or implied, and accepts no responsibility or liability as to the reliability, accuracy or completeness of the information set out in the reports. Any responsibility or liability for any information contained in the reports is expressly disclaimed. All information contained in the reports is subject to change at any time without notice. No member of the VTB Group has an obligation to update, modify or amend the reports or to otherwise notify a reader thereof in the event that any matter stated in the reports, or any opinion, projection, forecast or estimate set forth in the reports, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn.

In the United Kingdom, the reports are approved and/or communicated by VTB Capital plc, a bank authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The reports are intended for those persons that would be classified as eligible counterparties or professional clients under the Financial Conduct Authority’s Conduct of Business rules. The reports have been made publicly available, and as such, constitute an ‘acceptable minor non-monetary benefit’ pursuant to Article 12(2) Commission Delegated Directive (EU) 2017/593 (as implemented into United Kingdom domestic law and regulation following the United Kingdom’s departure from the European Union). The reports do not intend to communicate an invitation or inducement to engage in investment activity, and as such do not fall within the definition of a Financial Promotion as per s.21 of the Financial Services and Markets Act 2000 (FSMA), and related rules and regulations (each as amended).

Reports are distributed in the European Economic Area (EEA) by VTB Bank (Europe) SE, registered with the number HRB 12169 at the register of companies in Frankfurt am Main and authorised by the Bundesanstalt fur Finanzdienstleistungsaufsicht (Federal Financial Supervisory Authority), Graurheindorfer Strasse 108, 53117 Bonn, Marie-Curie-Strasse 24-28, 60439 Frankfurt am Main and the European Central Bank, Sonnemannstrasse 20, 60314 Frankfurt am Main to provide banking transactions and financial services. Reports are intended for those persons classified as Eligible Counterparties or Professional Clients pursuant to Directive 2014/65/EU. In the United States, these reports are intended for persons who are considered ‘institutional investors’ as defined by FINRA Rule 2210(a)(4).

In Singapore, the reports are distributed by VTB Capital plc to accredited investors, expert investors or institutional investors only (as defined in the applicable Singapore laws and regulations and are not intended to be distributed directly or indirectly to any other class of person). Recipients of these reports in Singapore are to contact VTB Capital plc, Singapore branch in respect of any matters arising from, or in connection with, this report. VTB Capital plc, Singapore branch is regulated by the Monetary Authority of Singapore.

In Hong Kong, the reports are distributed by VTB Capital Hong Kong Limited, a licensed corporation (CE Ref: AXF967) licensed by the Hong Kong Securities and Futures Commission to “professional investors” (as defined in the Hong Kong Securities and Futures Ordinance and its subsidiary legislation) only.

In Russia, the reports are approved and/or communicated by JSC VTB Capital, a professional securities market participant regulated by the Central Bank of Russia. VTB Capital is not providing either investment advice or individual investment recommendations to the recipients of the reports or any other persons either under Federal Law On Securities Market of 22.04.1996 No. 39-FZ (or related rules and regulations, each as amended) or otherwise. These reports are not advertising as defined in Russian legislation, but are information and analysis not having product promotion as their main purpose and do not provide appraisal within the meaning of the Russian legislation on appraisal activity. Research reports do not constitute a personalised investment recommendation as defined in Russian laws and regulations, are not addressed to a specific client, and are prepared without analysing the financial circumstances, investment profiles or risk profiles of clients.


The reports are being furnished to certain persons as permitted by applicable law, and accordingly may not be reproduced or circulated to any other person without the prior written consent of a member of the VTB Group. Unauthorised use or disclosure of the reports is strictly prohibited.

By clicking ‘Confirm’ you attest that you are either a professional investor or eligible counterparty and agree to our terms of access as described above. If you are not considered to be a professional investor or eligible counterparty, please click ‘Decline’ and you will be reverted back to the VTB Capital website.