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Norilsk Nickel raises US$750M with lowest-coupon eurobond

Strong demand for Arctic mining group PJSC Norilsk Nickel Co.'s latest five-year eurobond offering Oct. 21 resulted in a lower coupon than all of its previous dollar-denominated note issues, according to one of the sale organizers, Russian state-owned investment bank VTB Capital.

The order book for the bonds exceeded US$2 billion with more than 110 bids from investors. As a result, the deal was increased from an initial US$500 million to US$750 million, while the price guidance was lowered three times, culminating in a final yield of 3.375%, according to Andrey Solovyev, head of debt capital markets at VTB Capital.

The initial yield guidance was about 3.625%, which was reduced to between 3.375% and 3.5% before finally settling at 3.3% to 3.375%, according to Interfax.

In the first half of 2019, Norilsk Nickel brought its net debt down to US$5.36 billion, a 24% reduction since the end of 2018.

The company's stock has been trading at all-time highs over 2019, having returned over 25% since the start the year as the price of nickel strengthened.

Norilsk Nickel has a variety of plans to raise its largely stagnant output of key metals — nickel, copper, palladium and platinum — over the coming years but faces the dilemma of maintaining its generous dividends versus investing in growth projects. CEO and controlling shareholder Vladimir Potanin hopes that a digital platform, now under development, could unlock new sources of funding.