SIBUR will check the owners of its Eurobonds

SIBUR will require holders of its Eurobonds to confirm that they were acquired legally – otherwise payments on bonds will be credited to type “C” accounts. We are talking about those investors who, after the introduction of sanctions in 2022, bought bonds from foreign owners at a discount and then transferred them to the Russian depository. According to Kommersant, the company believes that buyout transactions from foreign investors did not comply with the counter-sanctions legislation of the Russian Federation, since they did not receive permission from the government commission. The new procedure may reduce the interest of Russian investors in purchasing SIBUR Eurobonds from foreign owners.

SIBUR has decided to change the procedure for receiving payments for a number of holders of its debt securities, sources told Kommersant in banking circles. We are talking about the owners of three issues of Eurobonds totaling $1.5 billion with maturity in 2023–2025. On September 13, the company announced a tender for the redemption of Eurobonds of these series.

Now those bond holders who bought them after March 1, 2022 and whose rights are taken into account by Russian depositories must provide confirmation that the securities were purchased in compliance with the requirements of counter-sanction legislation: we are talking primarily about the decrees of the President of the Russian Federation dated March 1, 2022 No. 81 and dated March 3, 2023 No. 138.

As such confirmation, it will be necessary to provide, in particular, information on whether the Eurobonds were purchased from persons of unfriendly states (directly or through several transactions involving persons who are not persons of unfriendly states). It is also necessary to indicate whether permission was received from the Legal Commission on Foreign Investments to conclude such transactions.

If such confirmations are not given, then SIBUR will credit payments on bonds to type “C” bank accounts, as is currently provided for bond holders from unfriendly countries.

In fact, in this case, bond owners, even if they are Russian investors, will not be able to manage payments. SIBUR declined to comment.

Kommersant’s sources suggested that the new procedure may reduce the interest of Russian investors in purchasing SIBUR Eurobonds from foreign investors, since it will be difficult for them to obtain permission from the legal commission for such transactions. SIBUR’s position may also serve as a precedent for other large Russian companies that have issued Eurobonds and have not yet redeemed or replaced them.

Investment strategist of Arikapital Management Company Sergei Suverov notes that recently the popularity of transactions to buy back securities from foreign investors has greatly decreased, and the scale of purchases has decreased, but they still occur.

The expert believes that SIBUR’s intention to verify the legality of the acquisition of securities by holders is logical. According to Mr. Suverov, other companies can also introduce this practice to prevent non-compliance with the law. He believes that this is especially relevant in light of the problem of the weakening of the ruble, since the repurchase of securities from foreign holders leads to an outflow of currency from the Russian Federation. However, the head of the Central Bank, Elvira Nabiullina, said on September 15 that capital outflow is now not a significant factor in the weakening of the ruble, and in January-August the outflow amounted to only $28.6 billion compared to $195 billion for the same period in 2022.

Olga Mordyushenko