Kazakh oil firm Zhaikmunai cheapens costs with $560 mln bond

Nov 5. Reuters. ALMATY

Kazakh oil firm Zhaikmunai cheapens costs with $560 mln bondKazakh oil and gas producer Zhaikmunai has refinanced most of its debt with a $560 million issue of seven-year bonds that cheapened its overall cost of borrowing and left it with around $200 million in hand.

The senior bonds due 2019 were priced at a fixed annual coupon of 7.125 percent, London-listed Zhaikmunai said in a statement on Monday. Approximately $358 million of the proceeds would be used to refinance existing debt, it said.

Chief Financial Officer Jan-Ru Muller said the order book for the issue had been four times oversubscribed. The issue would allow Zhaikmunai to extend over 80 percent of its existing debt to 2019 and to reduce the interest rate it pays, he said.

The remaining proceeds from the issue would be used for general corporate purposes, the company said.

London-listed Zhaikmunai produces oil at the Chinarevskoye field in northwest Kazakhstan. It said in August it would acquire three nearby fields in the ex-Soviet republic, a country holding 3 percent of the world’s recoverable oil reserves.

Since issuing its first bond in October 2010, Zhaikmunai has increased total production by more than five times and reduced its leverage on a net debt to EBITDA basis from three times to below one, Muller said in the statement.

The notes, issued by subsidiary Zhaikmunai International B.V., have received preliminary ratings of “B2” from Moody’s and “B” from Standard and Poor’s.