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Russia & CIS

CASE STUDY: Norilsk Nickel Digs Up US$1bn in Loan Participation Notes

Leading miner Norilsk Nickel spotted a window of relative calm in global markets to sell US$1bn in 6-year senior loan participation notes, enabling the company to extend its maturity profile and capture strong investment appetite from eastern lenders.

Apr 12, 2017 // 4:39PM


Norilsk Nickel is a leading metals and mining company, the world’s largest producer of refined nickel and palladium, as well as a major producer of platinum and copper.

In March 2017, the company sought additional liquidity against a strong market backdrop, which resulted in the company pricing US$1bn in 6-year loan participation notes at the tightest levels it has ever seen in the Eurobond market.

Transaction Breakdown

The company completed a swift disclosure update from the last October 2015 transaction, with documentation ready within four weeks from beginning to end.

Owing to a global investor update conducted recently on the back of FY16 results released on 15 March, the company opted for a global investor call to market a new Eurobond transaction on 3 April, followed quickly by intraday execution.

The books were opened at about 8am UK time on 4 April, and saw strong traction from the start. The book quickly grew to around US$2.5bn by 11:30am UK time, when guidance was revised to the 4.25% area.

With more support coming from US accounts as the books went subject at 1:30pm UK time, final guidance confirming the pricing range was released at around 2pm UK at ‘4.00-4.125%’. On the back of over US$3.2bn of demand, final yield on the transaction was set at 4.10% at around 4pm UK time.

The final size of the transaction was set at US$1bn at 5:30pm UK, and the transaction subsequently priced later in the evening, coming 40bp inside IPTs, and around 15bp inside the company’s extrapolated curve; the new issue marks the tightest coupon ever achieved by the company in the Eurobond space.

The transaction managed to attract strong demand from Asian investors. In terms of geographical distribution, about 37% of the notes were placed with accounts based in Russia, 20% with accounts in Asia, 15% in Europe and a further 15% in Switzerland, 8% in the US, 4% in the UK, and 1% in other regions. Asset managers and funds picked up about 44% of the notes, while 56% were placed with banks and private banks.

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