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Deal Analysis: Nord Stream
12 October 2009
The Nord Stream pipeline project financing will prove to be a strong test for large scale ECA-backed financings related to the Russian market. The success of the deal is also likely to provide a kick-start to a number of other stalled capex financings in Russia.
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Russia export credit
Nord Stream ECA
Russia gas
Russia pipeline
The request for proposals for the a3.9 billion ($5.69 billion) financing of the Nord Stream gas pipeline linking Russia to Germany under the Baltic Sea has met with a positive response from international banks. The joint project finance advisers (JPFAs), Commerzbank, RBS and SG are fielding questions and of the 46 banks approached, 38 are understood to remain interested. UniCredit is acting as Additional Financial Advisor.
So far, no wholesale changes have been requested to the model term sheet. The potential sticking point for most international banks is their internal limits to Russian exposure, however since a market sounding exercise in February the capital position of most banks has improved.
Although liquidity could have been improved by escrowing the project debt outside of Russia, after an extensive legal due diligence the sponsors decided that this would not be viable – an offshore structure runs the risk of being...
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