Sanctions-hit Rosneft’s Irish SPV makes delayed $2bn debt repayment

Move draws line under investor concern about getting money back

An Irish funding vehicle of Moscow-based oil and gas giant Rosneft repaid $2 billion (€1.81 billion) of bonds in dollars on Wednesday, days after the debt was due. The repayment drew a line under concerns about investors getting their money back amid an economic crisis sparked by Russia's war on Ukraine.

The bonds were sold in 2012 by Rosneft International Finance, a Dublin-based special purpose funding vehicle (SPV), before the wider company was hit by western sanctions in 2014 as a result of Russia’s annexation of Crimea.

The bonds matured last Sunday, with the three-day repayment delay said to be down to public holidays in Russia on Monday and Tuesday – even though fellow state-controlled energy group Gazprom repaid $1.3 billion of bonds, as scheduled, at the start of the week.

Bloomberg reported on Thursday that the Rosneft debt had been settled the previous day, in dollars.

Concerns surrounding the settlement of both bonds had gone into overdrive over the weekend, when Russian president Vladimir Putin issued a decree authorising the payment of bondholders from so-called hostile nations in roubles, as Russian state institutions, companies and individuals close to the Kremlin have been hit by waves of western sanctions in recent weeks.

Default

A repayment in a currency other than the one used to originally issue the bonds would be seen as tantamount to a default. The rouble has plunged in value against major currencies in recent weeks.

Creditors from countries that have not imposed sanctions against Russia, such as China, may be able to be repaid in the currency a debt was issued in if the debtor gets special permission to make the payment, according to Mr Putin’s order. The Rosneft payment may have been transferred before the decree.

An estimated figure of more than $130 billion of foreign-currency debt is owed by the Russian government and private sector.