Bonds and debt management
Nornickel maintains a conservative approach to managing its debt. As of 31 December 2022, its net debt / 12M EBITDA stood at 1.1x. To raise new debt, the Company considers both public instruments and bank loans, striving to balance both in its debt portfolio. When choosing debt financing sources, the Company pays particular attention to the debt currency and loan parameters.
In October, the Company placed a RUB 25 billion exchange-traded bond with a 9.75% coupon and a put option exercisable in 3 years, named by Cbonds as the Best Primary Offering of a Metals Company. In December, the Company placed two bond issues in Chinese yuans, a 3-year CNY 4 billion bond and a 3.5-year CNY 5 billion bond with coupon rates of 3.95% and LPR 1YThe Loan Prime Rate 1Y (one-year loan prime rate) is available at https://iftp.chinamoney.com.cn/english/bmklpr/. + 0.1%, respectively, and a put option exercisable in 3 years. The bond with a variable LPR-based coupon rate was the first placement of its kind in the Russian market.
During 2022, the Company redeemed two eurobonds: the USD 500 million eurobond in March, exercising a call option one month before maturity to optimise finance costs, and the USD 1 billion eurobond, redeemed on time in October.
The Company closely monitors changes in the external regulatory environment to enable timely responses, while prioritising strict compliance with the terms of debt instruments and promptly aligning loan documents with applicable laws. The Company meets all payment schedules on time, fully servicing its debt as planned. In addition, the Company timely renews permits from the Russian Government required to make payments of principal and interest in foreign currencies to foreign creditors.
In September, holders of all of the Company’s five eurobonds (USD 3.75 billion in total) approved amendments to transaction documents, including split payments to Russian and foreign investors, a simplified redemption mechanism and appointment of a new trustee. This complex deal was the largest of its kind among Russian issuers in terms of the number and total amount of issues involved at once. It also ensured full compliance of offering documents with Russian laws and enabled the Company to mitigate the default risks while continuing payments to foreign depositories through a paying agent.
Following the amendments to offering documents in September and October 2022, the Company split interest payments on all of its eurobonds (separate payments to holders whose rights are recorded by Russian depositories (“Russian holders”) and holders whose rights are recorded by foreign institutions (“foreign holders”)). The scheduled redemption of the eurobond in October also involved split payments. Russian holders received their first payments since February 2022, when funds of the National Settlement Depository (NSD) were frozen. The Company was also notified that international clearing systems made payments on all of the Company’s eurobonds to at least some foreign holders, which makes the Company the first Russian issuer to achieve such a result with split payments.
In November 2022, the Expert RA national rating agency confirmed the Company’s highest investment-grade credit rating “ruAAA”. International rating agencies withdrew and no longer issue credit ratings on Russian companies due to sanctions imposed on Russia.
As of 31 December 2022, the Company’s total debt was USD 11.7 billion, up 12% year-on-year. The increase was mainly due to drawdowns from standby facilities for refinancing purposes amid rising external challenges.
As of the end of 2022, Nornickel had eight bond issues outstanding: four eurobond issues for a total of USD 2.75 billion and four replacement bonds – two for a total of RUB 50 billion and two for a total of CNY 9 billion.
For more details on Nornickel’s debt instruments, see the Company website.
