Russ Oil-Gas

31 August 2007 - Upstream OnLine - Russia's state-controlled oil producer Rosneft plans to issue rouble-denominated bonds worth 45 billion roubles ($1.76 billion) in 2007-08, a banking source said today. "They will be issued in three tranches," the source told Reuters. The source said the company mandated Troika Dialog, VTB and Gazprombank to organise the issue. The first will be issued by the end of this year, the other two sometime next year, the source added. The bonds will have a duration of up to seven years. But Rosneft made it clear the decision is not yet final. "Directors at Rosneft need to take the decision to issue the bond and they haven't yet met on this," a Rosneft spokesman told Reuters. In July Rosneft postponed a planned dollar bond up to $5 billion due to market volatility. The bond was part of a $15 billion medium-term note programme to help recover debts stacked up from acquiring most of bankrupt Russian oil giant Yukos. At the start of 2007 Rosneft had debts of $13 billion and has since raised a further $22 billion loan from a consortium of international banks. When delaying the bond Rosneft said it would utilise other funding options. "Rosneft is probably thinking the situation on the international market will not improve in the medium term," analyst Mikhail Nikitin at Raiffeisen Bank in Moscow told Reuters. "They were not happy with the eurobond terms, and local borrowing is less expensive." Other analysts feel state-controlled Rosneft could be under pressure from the government to keep its finances closer to home.