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bne Invest
May 10, 2019 www.intellinews.com I Page 15
Investors "euphoric" about Russian OFZ treasury bills, auction sets a new record high
Russia’s Ministry of Finance held its first ever “unlimited” auction for its ruble-denominated OFZ treasury bills to high demand on May 8.
The ministry placed almost RUB100bn (or around $1.5bn) through two fixed coupon bonds (2026 and 2022 maturities). The auction was the first one with no limits on the amount of bonds on offer and a total of RUB73.3bn of the 2026 fixed-coupon bond were sold.
Dividends of Russian diamond major Alrosa to benefit from selling non-core assets
Russian diamond major Alrosa sold RUB1.2bn ($18mn) worth of non-core assets in January- March 2019, the company said on May 7. The biggest sale was of the Blue Wave sanatorium which was auctioned for RUB1.21bn.
"Total sale size is equivalent to 8% of 1Q19 estimated FCF [free cash flow] and may be positive for future dividend payments if the company decides to distribute this cash inflow," BCS Global Markets commented on May 8.
Overall over the course of 2019, Alrosa plans to alienate 90 non-core assets with a total book value of RUB6bn, the company added.
Alrosa pays 70% of its FCF in dividends and is one of the best-paying dividend stocks among Russian
The OFZs have been on a rollercoaster ride in
the last 18 months. Backed by rock solid funda- mentals and paying a high 8-9% yield, the OFZs were very popular last year, until the US imposed the April 6 round of sanctions which lead to a sell off. However, as it has become clear the US Fed- eral Reserve bank will not continue its tightening this year, appetite for OFZs returned at the start of this year as investors load up on OFZs once again.
Read the full story here
Metals and Mining equities. The name is included in BCS GM's Dividend Basket portfolio that shows a 12-month dividend yield of 13.7%.
Alrosa reported revenues of RUB61.4bn ($921mn) for the fourth quarter of 2019, down by 14% q/q. The company's Ebitda was down 33% q/q to RUB26.9bn, which was 2% below the consensus expectations of analysts.
Earnings for 2018 overall stood at $397mn and missed expectations by 4%. Alrosa's net profit in the reporting quarter was 69% q/q down to $114mn. The decline was attributed to non- operational losses. While the Alrosa's earnings were below the expectations, the cash flow outperformed the consensus, delivering an upside to dividend expectations.