All papers of Kazan. 2005

Kazan placed two bond issues on the domestic market: one billion rubles in July (annual) and one billion rubles in October (five-year). Both loans were repaid on time in 2006.

2006

Three-year bonds worth 2.3 billion rubles were placed with maturity in August 2009. The city paid them off on time.

2007

In December, the city placed annual bonds worth 1 billion rubles (the securities were redeemed in December 2008).

2008

Annual bonds for 2.3 billion rubles were issued (redeemed on August 29, 2009)

2009

Two-year bonds were issued with a maturity date in December 2011.

Kazan will place four-year bonds for 2 billion rubles, said Kazan Mayor Ilsur Metshin. The subscription for the securities was completed yesterday, the placement will take place on the MICEX on December 22, Marat Abdullin, deputy head of the financial department of the Kazan executive committee, told Vedomosti.

The organizer of the placement, Troika Dialog, predicted the yield rate in the range of 8.1–9.1% per annum. The issuer acted differently: after analyzing the proposals of potential investors, it set a single rate for all 16 coupons – 8.75%. The decision of the Kazan Executive Committee was published on the website of the mayor's office.

Kazan has a high debt burden – this circumstance determined such profitability: the rate of 8.75% assumes a premium for higher risk, says banking sector analyst at Veles Capital Investment Company Yuri Kravchenko. According to his data, Kazan’s absolute debt is 19.3 billion rubles with expected income in 2010 of 10 billion rubles.

Kazan will use the money from the bonds to refinance its “commercial debt,” which amounts to 5.3 billion rubles, says Airat Garipov, head of the executive committee’s financial department. According to him, the rest of the city’s debt – 14 billion rubles – is budget loans at 2.875% per annum for the construction of roads for the 2013 Universiade.

On December 24–25, Kazan must pay 930 million rubles on a loan to Bank of Moscow (at 7.2% per annum), 500 million rubles to Khanty-Mansiysk Bank (at 8%), while February 14, 2011, is the due date for repaying a loan of 1 billion rubles to it, said an employee of the executive committee's financial service. Vladimir Redkin, director of regional finance at FitchRatings, is confident that the loan will be used to pay off these debts. "After this, the structure of Kazan's debt will change significantly," he noted. "Kazan will still owe 2 billion rubles to banks, and 3.2 billion rubles in bonds," the analyst concludes (see inset). According to Redkin, this will allow the city to get rid of refinancing operations.

"By placing a loan at 8.75% per annum, we proceeded from the fact that the cycle of lowering the Central Bank rate to the lowest possible level had ended, and thus insured ourselves against a possible further increase in the cost of new borrowings. This will save up to 1 billion rubles," says an official of the financial department. In 2011, Kazan budgeted 780 million rubles for servicing bank loans, Garipov said earlier.

The rate was reduced in advance