Construction of 1,100-kilometer TurkStream pipeline to start in June

Updated 05 June 2015

Construction of 1,100-kilometer TurkStream pipeline to start in June

PARIS: Construction of the 1,100-kilometer TurkStream pipeline supplying Russian gas to Turkey will begin at the end of June, a spokesman for the Gazprom-backed project said.
The official attending a global gas conference in Paris said that an accord concluded in May with the Saipem construction group will allow work on the first of four sections of TurkStream to start by the end of June.
During the conference, officials revealed the name of the 63 billion cubic meter capacity pipeline had been changed from the original Turkish Stream to TurkStream.
That news follows Gazprom’s May 7 forecast of TurkStream beginning operations in December 2016, providing the company an alternative route for pumping Russian gas westward that averts its pipeline across Ukraine.
The new pipeline — stretching to Turkey’s border with Greece via the Black Sea — was announced in December 2014 by Russian President Vladimir Putin to replace the initial South Stream project to supply gas to southern Europe with a conduit to Bulgaria.
South Stream was scrapped amid rising tensions between Moscow and the European Union over separatist violence in Ukraine, and concerns in Brussels over Gazprom’s alleged dominance of Europe’s gas market.
Despite the looming start of construction, Russia has yet to sign an inter-governmental agreement with Turkey on TurkStream, held up by what media reports describe as deadlocked negotiations over the price of piped Russian gas.
Asked about the project during a press conference Tuesday, Russian Prime Minister Dmitry Medvedev said “all the documents are currently being prepared and everything is functioning in that regard,” and that Russia “has reached an agreement in principle with Turkey.”


Cathay Pacific shelves US dollar bond plans amid Hong Kong unrest

Updated 13 min 43 sec ago

Cathay Pacific shelves US dollar bond plans amid Hong Kong unrest

SINGAPORE: Cathay Pacific Airways has shelved plans for its first US dollar debt deal in 23 years, the airline said on Friday, after sources told Reuters that global investors had questioned the pricing due to civil unrest in Hong Kong.

The airline, the biggest corporate casualty of widespread anti-government protests in the Asian financial hub, on Friday lowered its second-half profit expectations, citing “incredibly challenging” conditions in its home market.

Cathay had started meeting investors in Hong Kong and Singapore on Sept. 24 after it mandated four banks to explore carrying out a US dollar denominated bond, according to a term sheet issued at the time, seen by Reuters.

It would have been the first US dollar debt deal for Cathay since 1996 and had been touted as a landmark transaction for the airline given all of its debt is denominated in Hong Kong dollars.

The issuance was to be unrated, and two sources with knowledge of the matter said that Cathay was willing to pay 200 basis points over the US Treasuries rate to secure three-year or five-year funding, with the size and term of the placement dependent on demand.

FASTFACT

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Cathay has only carried out 12 bond transactions in the past decade and all were priced in Hong Kong dollars.

However, investors demanded a higher price of at least 300 basis points over US Treasuries, which made the deal more expensive for Cathay, said the sources, who were not authorized to speak publicly about the matter. Cathay’s term sheet had said the transaction would be reliant on market conditions. A Cathay spokesman on Friday said the Hong Kong dollar private placement market was providing more funding opportunities and a debt issuance in that market was completed last month. “We will continue to monitor the US dollar bond market in future,” he said in a statement.

Dealogic data showed that Cathay raised $102 million in October and $64 million in May through Hong Kong dollar denominated deals.

The airline has only carried out 12 bond transactions in the past decade and all were priced in Hong Kong dollars.

Cathay had mandated Bank of America Merrill Lynch, BNP Paribas, Deutsche Bank and HSBC to work on the shelved US dollar bond deal.