Gazprom Neft plans to borrow some US$2 billion next year as it expects international oil markets to stabilize and the Russian central bank to reduce interest rates further, the company’s CFO, Alexey Yankevich, told Bloomberg in an interview. Yankovich said the company will be an “active player” on the domestic debt market, planning to use most of the new borrowings to refinance existing debt.
As per U.S. and EU sanctions, Gazprom Neft can’t borrow from international lenders. Its plans envisage bonds with a maturity of between five and seven years along with bank loans. Already this month Gazprom Neft sold some US$250 million worth of seven-year bonds with a coupon of 8.25 percent. It is also mulling over shorter-term debt, to be sold by the end of the year, Yankevich said.
The gas major seeks to take advantage of the further quantitative easing it expects the central bank to implement later in the year as long as inflation continues falling. Since the start of the year, the central bank has lowered interest rates three times, but suspended easing measures last month amid increasing tensions with the U.S.
Yankevich also told Bloomberg that Gazprom Neft plans to hike its dividend to US$0.25 (15 rubles) per share in 2019, from about US$0.18 (10.68 rubles) for 2017, thanks to an upbeat production growth forecast and higher refining margins after a refinery upgrade. Currently, Gazprom Neft has a payout ceiling of 25 percent of net profits but it is considering going above it, following a directive from the Kremlin that state-owned oil and gas companies distribute half of their net profits to shareholders.
The company reported a 23.1-percent increase in first-half profits attributable to shareholders, to US$1.86 billion (111.27 billion rubles) on revenues of US$15.74 billion (944.27 billion rubles), up 22.5 percent on the year.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.