Bloomberg.com — Credit Bank of Moscow Plans 1st Ruble Eurobond Sale in 16 Months
OAO Credit Bank of Moscow is set to become the first Russian borrower in 16 months to sell ruble-denominated Eurobonds, trying to lure global investors back to a market frozen by a currency slump and international sanctions.
The privately owned lender operating in the capital region plans to sell Tier 2 subordinated bonds maturing in 10.5 years at between 16 percent and 17 percent, according to a person familiar with the matter, who asked not to be identified as the information is private. The notes are callable in 5.5 years.
Russian companies shut out of global capital markets by the U.S. and European Union sanctions have had to offer higher yields to raise funds. Still, investor appetite for Russian dollar-denominated debt has remained limited. OAO Alfa Bank, Russia's largest private lender, raised $250 million last week after initially saying it would raise twice that amount. OAO Gazprom (OGZD) sold bonds at three times the rate of its peers.
"Investors may find it interesting as it offers a significant yield over government local ruble bonds," Richard Segal, head of international credit strategy at Jefferies International Ltd. in London, said in a message about the Credit Bank of Moscow's debt sale. "Given foreign-exchange volatility, it does make sense to borrow in the local currency. The high interest rate reflects the incremental credit risk of a lower-rated borrower, along with the exchange-rate differential."
The yield on Credit Bank of Moscow's ruble debt maturing in 2018 rose more than 130 basis points this week to 16.7 percent. The yield on its dollar debt due in 2018 fell seven basis points today to 13.77 percent.
The ruble has dropped 30 percent since July 2013 when Sovcom Finance BV made the last ruble Eurobond offering.