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American pension funds may sell Gazprom securities

Today or tomorrow Gazprom intends to determine the price of two Eurobond issues in London and New York. The amount that the concern plans to raise is not disclosed. Despite the not very favorable situation on the financial markets, it is expected that each tranche will be worth no less than $1 billion. Meanwhile, information appeared yesterday that could complicate the course of the placement. As reported by Bloomberg, the largest American pension funds sent letters to eight oil and gas concerns, including Gazprom, notifying them of the possibility of selling shares of these companies in connection with tightening sanctions against Iran and groups investing in its economy.

In June, Florida passed a law requiring state pension funds to divest assets from companies doing business with Iran. Other states, including California and Texas, may also take similar measures. According to Vremya Novostei, California Public Employees' Retirement System, New York State Common Retirement Fund and a number of other smaller funds owning securities (stocks and bonds) of the Anglo-Dutch Royal Dutch Shell, French Total, Indian Oil & Natural Gas , Chinese China Petroleum, Japanese Inpex Holdings, Spanish Respol YPF, Italian Eni and Gazprom for a total of $8 billion, sent letters to these companies a month ago.

Funds are interested in how companies plan to reduce the risks to share prices due to possible tightening of economic sanctions, regional conflict and a campaign to divest from Iran. They also report that they may be forced to sell all shares and bonds of these companies.

Currently, the Russian concern has only one project in Iran - the second stage of development of the South Pars field (together with Total and Petronas). Let us recall that a consortium of companies provided services to the Iranian government to increase the production of oil and gas condensate from the field and is now receiving payment for this in “real” money. Moreover, about two years ago, when the US Congress discussed a bill on sanctions against companies collaborating with Tehran, Gazprom was “released from responsibility” for participating in the second stage of the development of South Pars. However, no one can yet say whether this exemption will apply to the legislation of individual states.

Representatives of Gazprom declined to comment. There is a period of silence in connection with the placement of Eurobonds in the company. Market sources familiar with the course of the placement have not yet undertaken to assess the effect of the actions of the pension funds. In theory, says one of them, Gazprom should have disclosed information about the letter and the possible “sale” of its shares and bonds by American funds in the investment memorandum, at least in the risk factors section. But the draft memorandum that potential buyers received does not contain this data. However, Gazprom has time to correct this shortcoming. The final version of the memorandum is signed simultaneously with the documents on concluding transactions for the sale of bonds. By law, five working days are allotted for these procedures after the order book is closed and placement parameters are determined. That is, Gazprom’s lawyers have a few more days to think about it.

Alexey GRIVACHS