Page 63 - bne_Magazine_April_2018

bne April 2018 New Europe in Numbers I 63
Bond investors shrug off James Bond style spy scandal bne IntelliNews
The bond market was doing a lot of de- fying this month. Russia’s Gazprom de- fied UK Prime Minister Theresa May’s threatened new punishments following the attempt on the life of former double agent Sergei Skripal, who was poisoned on March 4 with a military-grade nerve gas in Salisbury, by issuing a €750mn Eurobond.
The Russian government followed on March 16 – the day May announced
the new measures – by getting a new sovereign $3bn Eurobond away to strong demand. The Russian govern- ment will follow up with another $4bn worth of bonds that will be swapped for the outstanding 2029 Eurobonds that are largely held by the failed Financial Corporation Otkritie bank.
Bond investors have shrugged off the politics and are snapping up Russian paper thanks to the relatively generous yields and Russia’s rock solid macro fundamentals. The Russian issues show that the break between the fraught poli- tics and business can be now measured in basis points. Market prices suggest the scandals are costing Russian issuers an extra 30bp on yields that have been falling dramatically over the last year.
Emerging markets in general were attracting bids in February, with a total of 327 issues worth $152bn versus 275 issues a year earlier worth $128bn, ac- cording to CBonds.
The biggest deal in February was by Credit Bank of Moscow (CBOM), one of the four troubled so-called Garden Ring banks and the only one to survive the recent turbulence. CBOM issued
a $500mn bond that matures in 2023 and pays a 5.55% yield.
That was joined by Moscow airport Domodedovo (DME) that issued a $300mn bond that also matures in 2023 with a 5.075% yield, and broker/dealer BCS Global Markets that has become
a regular visitor to the bond market
with smaller issues. In February BCS GM issued a $100mn bond that matures in 2028, which the bank has been using to fund its growing business.
A total of 14 issues from the Com- monwealth of Independent States (CIS) were away in February, worth a total of $5.7bn, which was one less bond than
CEE: new bond issues $mn
the same month a year earlier, but worth more than the $4.9bn raised last year.
A large part of the non-Russian bonds was Belarus’ sovereign issue for $600mn that matures in 2030 paying 6.2%. The Belarusian ministry of finance has said that it intends to raise a total of $1bn this year.
CIS: Volume of new issues, $mn
Russia: Volume of new issues, $mn
Source: CBonds
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