debt market

The placement of the second largest ruble corporate loan was completed yesterday. Of the declared volume of 7 billion rubles. Centertelecom was able to attract no more than 5.6 billion rubles. This is the second time this year when the issuer failed to place the issue in full.
The decision to place the fourth loan of CenterTelecom (CTK), adopted by the company’s board of directors in May of this year, initially caused bewilderment, primarily due to the gigantic volume of the issue of 7 billion rubles, which was second only to the placed issue of Gazprom (10 billion rub.) and the still unplaced issue of Transneft (12 billion rubles). And the situation on the debt market was clearly not conducive to massive borrowing. In addition, two Centertelecom loans were traded on the market: the second with repayment in April 2005 and the third with an interim offer in September 2004 and repayment in September 2006.
In the summer, due to weak market conditions, the issuer postponed the placement date twice. However, in mid-August, without waiting for the market situation to improve, the company began placement. Its period was limited to ten working days. According to the director of the analytical department of the Region Investment Group, Alexander Ermak, “there was no point in delaying the placement any further, taking into account new issues from other issuers and the expectation of rising interest rates on world markets. For CTK, the new loan will still significantly simplify servicing the current debt.” .
At the same time, according to Aton Investment Company analyst Alexei Bulgakov, “as soon as it became known about the fourth issue of the CTK, investors reconsidered their interests.” After the premium at the TsTK-4 auction, investors even more had an incentive to exit TsTK-3. This means that the issuer will have to buy back most of the third issue early under the offer.
As a result, by yesterday, slightly more than 80% of the issue had been placed. According to the Sibonds agency, this is the second incompletely placed loan this year (in July, part of the issue was placed by Stroymetresurs). CenterTelecom itself is satisfied with the results of the placement. According to the director of the company's financial department, Artem Shatrakov, "the funds received will be used to finance the company's investment activities and partially to restructure current debt."
At the same time, in general, the placement of Centertelecom did not have much impact on the debt market. However, according to the head of the department of operations with ruble instruments at VTB Vladimir Borunov, there is a stratification in the sector of communication companies. “Now investors do not consider 'telecoms' simply as a separate segment of the debt market. Market participants distribute their telecom limits into sublimits for specific enterprises,” he explained. Analysts at Zenit Bank noted in their study that, despite the growing debt burden, “the industry has seen enterprises that have sacrificed financial independence for the sake of maintaining market share, and companies that have not crossed this fine line. CTK".
As Alexei Bulgakov, an analyst at Aton Investment Company, notes, “a new issue in an amount of less than 7 billion will not solve the medium-term problems of the CTK, although it may improve the debt structure.” At the same time, according to Mr. Bulgakov, given the high probability of early repayment of the third issue, “already next year the issuer will have to look for 6-7 billion again.”
Kommersant will monitor developments.
YULIA Kommersant-Chaikina

Newspaper "Kommersant" No. 161 dated 01.09.2004, p. 6

Authors:

Yulia Chaikina

Centertelecom postponed problems for the future