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Azerbaijan Weighs $1 Billion-Eurobond Sale to Fund EU Gas Link

Azerbaijan is considering a sale of $1 billion of Eurobonds to fund construction of a route to bring Caspian natural gas to European markets.

The Southern Gas Corridor venture plans to offer bonds by the end of this year or next year if the market is favorable, according to Afqan Isayev, head of the state-run projec. Azerbaijan also seeks to borrow $500 million from the World Bank, he said, without elaborating on the timing.

The U.S. and the European Union have given political support to the Southern Corridor to diversifying supplies away from Russia. The route will deliver gas from the BP Plc-led Shah Deniz deposit off Azerbaijan's coast in the Caspian Sea through a series of connecting pipelines across Turkey, eventually reaching Italy.

Azerbaijan is funding $13.5 billion of the projects, which have a total $46 billion price tag, Isayev said. The state has already invested $4.7 billion, he said.

Southern Gas Corridor's $1 billion of 10-year bonds have gained since their sale in March, with the yield falling 45 basis points to 6.49 percent. This compares with 5.33 percent for the Azeri government's 2024 dollar bonds and 4.5 percent for Russia's newly sold 2026 bonds.

Azerbaijan is holding talks with other development banks including the Asian Development Bank and the European Bank for Reconstruction & Development, Isayev said.

Source: Bloomberg

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