bne IntelliNews -

Hot on the heels of Norilsk Nickel's $1bn bond placement, Russia's largest gas producer Gazprom placed three-year Eurobonds also worth €1bn on October 8, Reuters and RIA Novosti reported, citing unnamed banking sources.

Organised by Banca IMI, JPMorgan, and Uniсredit Bank and roadshowed by Gazprom from October 5, the issue enjoyed double the proposed supply, enabling a two-fold yield guidance cut from 5-5.125% to 4.75-4.875%, to the final placement yield of 4.625%.

The issue came a day after Norilsk Nickel (NN), the world's biggest producer of Nickel, sold $1bn in the first benchmark-sized Eurobond in 11 months in a successful test of the improved political temperature over Ukraine and resultant investor climate. The two issues may mark the start of a resurrection for battered Russian issuers.

Norislk Nickel paid a larger premium than Gazprom: the company placed $1bn in seven-year bonds to a demand of $4bn at 6.625% (yield cut twice from 7% to 6.75% to 6.625%).

The NN issue was hailed as successful and one possibly paving the way for other Russian issuers as demand for emerging assets is again on the rise, quality Russian securities are scarce, and Russian corporates are considering various options for refinancing short-term debt.

However, analysts say the market is likely to remain open only for a limited number of large issuers that maintained investment-grade ratings and are not directly influenced by EU and US sanctions against Russia.

Gazprom, which Fitch recently said would be in mid-A category if not capped at Russian sovereign BBB- rating, is one issuers that can safely bypass the sanctions.

After the introduction of the "sectoral" sanctions in summer 2014, Gazprom was the first Russian issuer to tap the Eurobond market in November 2014. The gas major, which was not included in the sanctions lists, placed $750mn worth of one-year Eurobonds at 4.45%.

In February 2014, before the outbreak of the Ukrainian crisis, Gazprom placed €750mn worth of seven-year Eurobonds yielding 3.6%.

Gazprom's most recent placement could become a benchmark for Russian sovereign Eurobond issue, as sovereign debt is not directly sanctioned by the EU and US. According to the latest draft of 2016 federal budget, the Finance Ministry allowed for borrowing $3bn abroad, after cancelling $7bn worth of Eurobonds in 2014 and 2015 due to hostile market conditions.