| The market leader will place Eurobonds this year The largest Russian bank, Sberbank, has made the long-awaited decision by experts to issue Eurobonds. Its press service yesterday released a message according to which, subject to favorable conditions, the bank will place a “significant issue in terms of market volume” with a floating coupon rate in the fourth quarter of this year. Analysts believe that Sber can borrow from 500 million to 1 billion dollars at 3-4.25% per annum, and call this decision timely.
Investors have been waiting for Sberbank to enter the Eurobond market for a long time, but it itself announced this intention for the first time (and back in the spring, Sberbank President Andrei Kazmin told reporters that there was no need to issue Eurobonds). According to a press release, the bank has already selected a manager and registrar for the loan - UBS Investment Bank. According to the agreement in force between him and Sberbank, the parameters of the future issue have not yet been disclosed.
“The volume and a number of other parameters have not been finally determined,” Alexander Zakharov, deputy chairman of the board of Sberbank, told the Vremya Novostei newspaper yesterday. “In the near future we will hold a road-show, after which decisions will be made.” Experts tend to compare Sber with Gazprom, which in September placed seven-year bonds worth 1 billion euros at a coupon rate of 7.8%. UBS Investment Bank was also one of the co-organizers of this issue.
Renaissance Capital analyst Pavel Mamai says that “Sberbank can well afford such a loan.” In his opinion, the “significant in volume” issue that Sber is talking about will amount to no less than $500 million. His colleague from the Aton Investment Group, Alexey Yu, believes that we are talking about $750 million - $1 billion. True The bank, obviously, will not borrow for seven years, like gas companies - experts agree that the most likely period of circulation of its securities is 3-5 years. “I believe that Sberbank will focus primarily on European investors,” notes Pavel Suprunov, head of the market analysis department of Rosbank.
According to Mr. Yu's estimates, the bond coupon will be set at LIBOR + 1.75--2%. Pavel Mamai from Renaissance believes that “with a 3--5-year issue, the rate of LIBOR + 2--3% is more likely.” “It’s strange that the issue will be issued at a floating rate, which will apparently be tied to LIBOR,” notes an Aton analyst, “now the yield on the market is low, and it’s optimal to borrow at a fixed rate.” “Perhaps the bank wants to avoid interest rate risk: its loans to corporate clients may also have a floating rate,” believes Andrey Ivanov, senior analyst at Troika Dialog.
In general, experts call Sberbank’s decision successful. “Sberbank is the only player in the Russian market that can issue loans in hundreds of millions of dollars,” says Mikhail Matovnikov, head of the banking department of Interfax, “and such an issue will allow it to significantly increase its margin.” Rates on Sber's dollar deposits fluctuate at 7.75% per annum, and the yield on its Eurobonds, apparently, will not exceed 3%,” adds Mr. Ivanov. In his opinion, in the near future the country's largest bank will add a Moody's or Standard and Poor's rating to its Fitch rating.
Following Vneshtorgbank.
Although Sberbank may be considered a first-class borrower, at least by Russian standards, it is not the first to enter the Eurobond market. Previously, bonds were placed by Gazprombank, Alfa Bank, MDM Bank, Zenit Bank and the Bashkir Uralsib. And last week, the second Russian state bank, Vneshtorgbank, announced its intention to issue Eurobonds worth $500 million in December. Yuri VERETENNIKOV |
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