Gazprom Sells $1.7 Billion, Two-Part Global Bond -Source

        By Erin McCarthy and Art Patnaude 

    Russian oil and gas company OAO Gazprom (OGZPY, GAZP.RS) Wednesday sold $1.7 billion in seven- and 15-year notes, according to an investor familiar with the deal.

    The seven-year, $800 million tranche sold at a yield of 3.85%, according to an investor familiar with the deal. Gazprom sold $900 million of the 15-year notes at a yield of 4.95%.

    The state-controlled issuer took advantage of demand among investors for new corporate bonds from the country. Order books reached $2.9 billion for the $1.7 billion offering, the investor said.

    There are few companies in developing countries that can afford to sell bonds with maturities beyond 10 years, with the risk of not being paid back perceived to be too high. But ties between the Russian government and Gazprom provide an added confidence needed to issue longer-dated bonds.

    "Gazprom is a well-known quasi-sovereign company with a still-strong credit profile, meaning it can print longer paper," said Alexander Sklemin, credit analyst at Raiffeisen Bank in Vienna. "I believe one of key reasons for this deal are refinancing needs, so the longer the maturity profile, the better," he added.

    Gazprom in the past sold two 30-year bonds, which mature in 2034 and 2037, according to Tradeweb data. After those, the next-longest bond comes due in 2022. Credit analysts said that the 15-year bond--maturing in 2028--fills that gap.

    BNP Paribas, Gazprombank and J.P. Morgan were the banks running the deal.

    The issuer is rated investment grade, with a Baa1 rating from Moody's Investors Service, and BBB ratings from both Standard & Poor's and Fitch Ratings.

    -Sarka Halas contributed to this article.

    Write to Erin McCarthy at and Art Patnaude at