Page 149 - RusRPTJun24

The issuer has four issues of bonds in yuan in circulation (all issued at the end of 2022 - beginning of 2023, there were no bonds in circulation previously), but none are traded on the secondary market, since, apparently, all are private placements in favor of banks. This time, judging by the comments of the organizing brokers, there is an intention to partially syndicate the issue to the market (in this regard, it is not clear why the minimum application limit for the primary acquisition was set - the equivalent of ₽1.4 million in yuan).
Eurosibenergo does not publish financial statements under IFRS; it is published by En+ with a sectoral breakdown of the balance sheet, P&L and cash flow of the energy business (segment data apparently also includes data from the holding, since its balance sheet reflects the stake in Rusal owned by En+, and the cash flow statement for 2022 there are “dividends from the metallurgical segment”). Segment reporting reflects approximately neutral free cash flow generation over the last three years, a moderate amount of debt (debt/EBITDA ratio of 2.3x) with a high cost of servicing it (EBITDA/interest <2x). A reduction in the segment's debt in 2023 by $1 billion to $2.9 billion is shown, the nature of which is unclear; The segment's FCF for the same period was slightly above zero. ACRA in its August report mentions “available credit lines” of ₽200 billion as of June 2023.
Note that Rusal and Eurosibenergo account for about 30% of all yuan bonds in circulation, with most issues being private placements (apparently in favor of the group's main creditor). The latest Rusal issue in yuan (RU000A1089K2) is quoted at a yield of 8.15%. In principle, placements from holding companies should offer a yield premium for structural subordination relative to operating company bonds, especially given the large volume of bonds outstanding from both companies, so we do not expect placement yields to decline relative to the benchmark.
Alfa-Bank announced the results of the placement of replacement bonds (ZO) series ZO-400 (RU000A108BD9), replacing Eurobonds Alfa perp 5.9%. In total, $262 million of securities were issued, i.e. 66% of the Eurobond being replaced, which is quite a lot for the latest placements of POs (in issues of PO ICB, for example, 30–35% of Eurobonds are exchanged). About $200 million of securities were exchanged from NSD, the rest apparently through interdepository transfers.
The main terms of the ZO-400 issue are similar to the Eurobond issue - quarterly coupon, first reshuffle and call on May 23, 2027, reshuffle at 5Y UST + 457 bp. every 5 years, securities can be redeemed early at par on each coupon payment date after the first rearrangement, the coupon can be reset unilaterally, write-off conditions (coefficient H1.1 < 5.125% or the introduction of external administration) are standard for banking transactions.
Pre-marketing has begun for another placement of local bonds pegged to
149 RUSSIA Country Report June 2024 www.intellinews.com