Some firms have opted to substitute their eurobonds to ruble debt, the outlet has found
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Russia’s biggest companies – including unsanctioned ones – are “bypassing Wall Street” for servicing their outstanding debt following Western sanctions that broadly disrupted critical financial operations needed to keep bonds functioning, Bloomberg reported on Monday.
Restrictions have complicated a large number of financial processes for servicing bonds even if a borrower hasn’t been targeted by sanctions, the outlet said. Companies and investors now search for alternatives, including swaps, buybacks and direct payments to bondholders.
Some companies like fertilizer producer Uralkali, miner Norilsk Nikel and metals giant Metalloinvest have opted to change bond documentation and pay the debt directly to investors in rubles, the outlet said. The country’s energy major Gazprom and one of the world’s largest steel producers, Magnitogorsk Iron & Steel Works PJSC, have swapped some of their eurobonds for ruble debt.
Gazprom Deputy Chairman Famil Sadygov told Bloomberg that replacement bonds were “the most reliable way” to service debt given the restrictions on financial infrastructure. He noted that holdings of ten of the bonds have already been substituted and another 12 will be replaced by the end of March, adding that Gazprom pays coupons on both the swapped Russian bonds and the remaining international bonds.