TKC Turkcell lletism Hizmetleri AS

By Christopher Whittall 

Russian energy giant OAO Gazprom became the latest emerging-market borrower to sell debt to international investors on Thursday, taking advantage of growing expectation that the U.S. Federal Reserve will delay raising interest rates.

Gazprom will pay an interest rate of 4.625% on a EUR1 billion ($1.12 billion), three-year bond, according to a deal notice released today. Gazprom didn't respond to requests for comment.

The latest offering follows several bond deals from emerging-market governments and companies this week as investors backed the idea that the U.S. Federal Reserve might push back raising interest rates following a weaker-than-expected jobs report released Friday.

Turkcell Iletisim Hizmetleri AS, Turkey's biggest mobile-phone operator, sold a 10-year, $500 million bond on Wednesday at an interest rate of 5.75%. Ghana issued a 15-year, $1 billion bond at an interest rate of 10.75% Wednesday. And Poland sold a six-year, EUR1.75 billion bond at an interest rate of 0.875% on Wednesday.

"These trades have really been driven by the benign interest rate outlook in the U.S. after Friday's weak payroll numbers. That's stimulated risk appetite, which has benefited emerging-market borrowers, " said Stefan Weiler, a managing director at J.P. Morgan Chase & Co.

Many economists believe emerging-market countries are vulnerable to a rise in U.S. interest rates and a stronger dollar. Low interest rates in the U.S. over the past several years encouraged some investors to buy higher-yielding emerging-market assets.

Emerging-market debt has rallied since Friday's jobs report. The extra yield investors demand to hold dollar-denominated emerging-market sovereign debt narrowed to 4.10 percentage points Wednesday, according to the J.P. Morgan Emerging-Market Bond Index , from 4.37 percentage points last Friday.

Russian borrowers took advantage of the rally to return to international bond markets after a lengthy absence.

Mining firm Norilsk Nickel broke a nine-month, dollar-bond freeze for Russian companies when it issued a $1 billion bond on Tuesday at an interest rate of 6.625%.

The average yield on Russian corporate and quasi-sovereign corporate debt denominated in U.S. dollars rose to more than 13% last December following a sharp fall in the price of oil, an escalation of the conflict in Ukraine and the imposition of U.S. and European sanctions against various Russian firms and individuals. The average yield is now 6.3%, according to Barclays, following a perceived easing of tensions in Ukraine. Yields rise as prices fall.

International investors have again become comfortable with holding Russian corporate bonds, which have performed strongly this year, said Patrick Zweifel, chief economist at Pictet Asset Management.

"As long as things haven't deteriorated in terms of sanctions, we've reached a sort of a 'new normal' that investors are pretty happy with," he said, adding that the interest payments investors demand are high enough to compensate for the political risk associated with holding this debt.

"Investors' perception of Russian risk has evolved over time," said Eric Cherpion, a managing director at Societe Generale, which was one of several banks managing the recent Norilsk Nickel deal.

"We got very strong investor feedback when we were on the road with Norilsk; they considered the situation in Russia has stabilized," he added.

Write to Christopher Whittall at christopher.whittall@wsj.com

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October 08, 2015 14:52 ET (18:52 GMT)

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