Page 15 - bne IntelliNews weekly newspaper June 23

Eastern Europe
June 23, 2017 www.intellinews.com I Page 15
Russia places $3bn Eurobond to high demand
bne IntelliNews
Demand for the latest issue of Russia’s sovereign Eurobonds exceeded $6bn, more than double the proposed amount of $3bn, according to the issue’s organiser VTB Capital.
The high demand flew in the face of current efforts in the US to significantly broaden the sanctions im- posed on Russia in 2014 for its actions in Ukraine.
Despite the rapidly worsening external environ- ment prior to the placement, including sliding oil prices, the Russian Finance Ministry on June 20 placed 10- and 30-year US dollar-denominated Eurobonds yielding 4.25% and 5.25%, respectively.
These marked the lowest rates in the country’s history. In stressing the sanctions-resistant nature of the sovereign offer, Andrei Solovyov of VTB Capital said foreign investors, “most of whom” were American, bought a “large part” of the issue.
Despite the sanctions threat, investors surveyed by Bloomberg on June 19 confirmed their interest in the Eurobond, which are seen as cheap and
coming in limited supply from Russia.
In September 2016, the finance ministry swiftly raised an additional $1.25bn worth of Eurobonds to help cover the budget deficit in 2016, adding
to the $1.75bn issue made in May 2016. The
yield guidance for the 10-year issue was 3.99%, and the book was oversubscribed at $7.5bn due to strong demand. Reportedly the bonds were placed at 3.9% yield, which was roughly 120 basis points over the 30-year Treasury bond.
Seen as defiance of Western sanctions, May’s issue was largely avoided by foreign investors as it took
a full two months to arrange Euroclear clearance. However, September’s placement was immediately included in international clearing systems and con- firmed Russia’s access to external capital markets.
The new issue proposed by the ministry in June is also immediately available for international clear- ing. The ministry plans $7bn worth of foreign bor- rowings in 2017, of which $3bn are net new bor- rowings and $4bn of refinancing previous issues.
COUNTRY REPORTS
Check out IntelliNews Pro’s Country Reports covering the 30 countries in Central & Eastern Europe/Commonwealth of Independent States.
A monthly round up of the most important economic, finance, business and political events, the reports are aimed at busy professional investors and companies that need to keep on top of the story.
To subscribe to the reports delivered by email get in touch with our sales staff for a trial.
T. +44 203 633 2008 E. sales@intellinews.com
Or go to bne.eu/welcome to see samples of this and other products.