Rosneft eyes Eurobond as it tackles debt

MOSCOW (Reuters) - Rosneft (ROSN.MM: Quote, Profile, Research, Stock Buzz)(ROSNq.L: Quote, Profile, Research, Stock Buzz) has repaid around half of its $22 billion acquisition bridging loan and hopes to refinance much of the rest, due by September 2008, before the year-end, the Russian oil firm's CFO said on Tuesday.

Peter O'Brien told the Reuters Russia Investment Summit that Rosneft hopes to launch its postponed benchmark Eurobond by the end of the year and is still looking at an issue of around $2 billion with a maturity of 5 to 10 years.

"It's possible that we'll be back before year-end. Hopefully markets will stabilize and investors are keen to have a discussion with us," O'Brien, who is Vice President of Finance and Investments, said.

O'Brien said the state-owned company aims to reduce its debt -- most of which was taken on to fund acquisitions -- to approximately 1 times EBITDA (earnings before interest, tax, depreciation and amortization) by 2010 and could use its treasury stock to reach this goal.

Rosneft has bought back $8 billion of its own shares, which it could sell if needed. The company raised $10.6 billion when it floated in London and Moscow in July 2006 in Russia's largest initial public offering of stock.

State-controlled Rosneft is likely to shift its focus towards fixed-rate borrowing from its existing debt profile, which is almost entirely floating rate, he added.

"We hope to be back to the market by year-end," O'Brien said. "We're inclined to move the debt portfolio into fixed."

O'Brien said current market turbulence meant it was difficult to say what spread Rosneft would achieve if it launches the Eurobond this year, but said that in absolute terms the company's cost of borrowing would not have altered.

"Spreads have come out substantially, but base rates have come in, so on an absolute basis there's not much change to where we were," he said.

"We are long commodities. We are a very well-endowed company in terms of resource and potential growth. It's unfortunate that we've been put in the same basket with other emerging market companies as these spreads have widened out," he said.

Rosneft, which is one of Russia's most indebted firms with outstanding debt of $25 billion, had planned to launch a benchmark Eurobond in July following an extensive investor roadshow, but the issue was put on ice due to unstable credit market conditions.

Rosneft's planned issue had been rated BBB- by Fitch and the group's debt is rated Baa by Moody's.

O'Brien said over time the company aimed to increase its free float from its current level of 15 percent, although the timing of this would depend on how markets perform and the value of Rosneft's share price.