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Russia’s oil major Rosneft plans no currency purchase with ruble bond proceeds

January 26, 2015, 18:14 UTC+3 MOSCOW
Rosneft started floating bonds worth 400 billion rubles on January 26 as part of its 800 billion ruble ($12 billion) program approved in December 2014
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MOSCOW, January 26. /TASS/. Russian oil giant Rosneft has no plans to purchase foreign currency on the domestic market using proceeds from the sale of bonds worth 400 billion rubles ($6 billion), Rosneft said in a statement on Monday.

“Bond placement is being done for the purpose of financing the company’s projects and production plan. It does not envisage purchase of foreign currencies,” the statement said.

Rosneft started floating bonds worth 400 billion rubles on January 26 as part of its 800 billion ruble ($12 billion) program approved in December 2014.

“Until the implementation of payments to suppliers, contractors and creditors, the company will hold all the ruble funds on ruble accounts and deposits of authorized banks,” the statement said.

Rosneft CEO Igor Sechin earlier said the company had no intention to raise ruble loans. “We have so far raised no ruble loans as only preparations were under way,” Sechin said at the time.

“We’ll follow the market situation but I don’t think that in the current conditions when the Central Bank has hiked the key rate we would raise these loans,” the Rosneft head said.

The Russian Central Bank hiked the key rate to 17% from 10.5% on December 16 to stem the ruble’s slump amid falling world oil prices, western sanctions, a faltering economy and large capital flight.

This measure helped the ruble strengthen from its record lows of 80 rubles to the dollar and 100 rubles to the euro.

Russian presidential aide and former Economic Development Minister Andrey Belousov said on January 15 that interest rates should be lowered as soon as the domestic financial market stabilized because it was impossible to do business in Russia at such a high rate.

The Rosneft head also said the company had possibilities to raise funding from other sources.

Rosneft placed exchange-traded bonds worth 625 billion rubles ($9.6 billion) on December 11. The company’s board of directors earlier made a decision to float 12 issues of bonds worth a total of 800 billion rubles.

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