CREDIT BANK OF MOSCOW placed a debut USD 700 mln perpetual subordinated Eurobond issue
26 April 2017 CREDIT BANK OF MOSCOW (the “Bank”) placed its debut perpetual subordinated Eurobond issue meeting Basel III requirements for additional Tier I capital. The Reg S/Rule 144A Eurobonds, issued to finance a subordinated loan to the Bank through the Bank’s special purpose vehicle CBOM Finance p.l.c., were listed on the Irish Stock Exchange and garnered USD 700 mln, a record-setting amount for the Bank. The quarterly coupon rate was fixed at 8.875% for the first 5.5 years. The bonds are callable in November 2022 and on every coupon payment date thereafter.
The Eurobond issue is the first public international placement of Reg S/Rule 144A perpetual subordinated notes, meeting the Basel III requirements (the Bank of Russia’s Regulation 395-P), out of Russia.
A series of meetings with investors in New York, London, Zurich, Singapore and Hong Kong resulted in a strong order book with a wide geographical coverage and international demand: UK (30%), USA (19%), Russia (17%), Europe (13%), Asia and Middle East (10%), Switzerland (9%), other countries (2%).
"The success of our preceding subordinated Eurobond issue in March paved the way for the new transaction, – noted Vladimir Chubar, Chairman of the Management Board. – Seeing the four-time oversubscription, we decided to upsize the placement compared to the target amount to accommodate the demand of a wide range of investors".
The order book opened with an initial price guidance set at the "low 9% area", but the 4-times oversubscription brought the rate down to 8.875%, with a certain premium to investors and an increase in the issuance amount to USD 700 mln, compared to initially targeted market benchmark.
The subordinated loan will be included in full in the Bank’s additional Tier I capital once the respective approval by the Bank of Russia is received.
This is a milestone deal for the Russian banking market continuing the Bank’s successful string of transactions closed earlier this year: a USD 600 mln subordinated Eurobond (Tier II) issue and a USD 500 mln syndicated loan. The Bank has become the leader in the Russian banking sector in terms of issuance size and number of public offerings successfully executed in the international capital markets this year.
Société Générale acted as sole structuring advisor, global coordinator and bookrunner, Credit Suisse Securities (Europe) Limited and HSBC Bank plc acted as global coordinators and bookrunners, while Citigroup Global Markets Limited and J.P. Morgan Securities plc acted as joint lead managers and bookrunners. REGION Broker Company LLC and Raiffeisen Bank International AG were joint lead managers.
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