June 27, 2014, 00:00

Eurobonds go to the stock exchange

Eurobonds will begin trading on the Moscow Exchange this year. For now they are available only to very large investors on the over-the-counter market Yulia Orlova Daniil Zhelobanov

“This may be of interest to retail investors, and in this sense we can talk about an increase in investment attractiveness and the number of participants, and this is an absolute positive,” says Andrey Zokin, First Vice President of Gazprombank. “But this is unlikely to have a serious impact on the market, since volumes will remain small.”

By the end of the year, the Moscow Exchange plans to launch trading in Eurobonds, its Chairman of the Board Alexander Afanasyev said at the annual meeting of shareholders.

“Interest in Eurobonds has grown after the rise in the dollar exchange rate; dollar deposits do not bring the desired profitability. We are now accepting Eurobonds for repo and expect to include them in exchange lists by the end of the year,” he explained.

This week the exchange admitted 97 Eurobond issues to interdealer repo. The plans include expanding the list, and the next stage is a repo with the central counterparty, where Eurobonds are planned to be admitted approximately at the end of summer, Anna Kuznetsova, director of the Moscow Exchange, explained to Vedomosti.

To admit Eurobonds to trading on the stock market, the exchange, according to her, conducts pre-marketing, finding out the needs of trading participants: “They name one or two dozen issuers, primarily the demand for issues of Russian banks.”

As soon as legislative issues are resolved, the exchange will be ready to begin trading. She already has experience: Eurobonds of the Ministry of Finance are currently trading on the stock market. Since the beginning of the year, the volume of trading in them amounted to 23.8 billion rubles.

Amendments to the law “On the Securities Market” regarding the admission of foreign issuers to trading are now in the State Duma, which may consider them in the first days of July, First Deputy Chairman of the Central Bank Sergei Shvetsov told Vedomosti.

According to a person familiar with the content of the amendments, they provide for the admission of securities to trading without the issuer's permission, and the requirement to translate reporting to the last three reporting dates is also removed - only a summary of the prospectus is needed.

The admission of Eurobonds to the stock exchange will make them more accessible to investors, although they are still in demand. “In the spring, the volume of investments by private clients in Eurobonds increased several times and amounted to $90 million,” Aton CEO Andrei Zvezdochkin said in an interview with Vedomosti.

But only wealthy investors will be able to trade securities. “The minimum lot for most Eurobonds is $100,000, there are more, and this is unlikely to be within the capabilities of most participants,” says Vladimir Tsuprov, managing director for investments at TKB BNP Paribas Investment Partners. - Foreign investors dominate this market, they have an established trading practice, and they are unlikely to be interested in the Moscow Exchange. So the news would be good, but it is unlikely that this market will be liquidated.”

The exchange will accept applications starting from $1000. “We expect that brokers will deposit Eurobonds with NSD and offer them to retail clients,” says its representative.

Russian players are now trading Eurobonds on the over-the-counter market. “The existing mechanisms are functioning normally, the Moscow Exchange is trying to compete with the over-the-counter market, but this will not affect us very much - we are getting by with the tools that we have,” said Vozrozhdenie Bank Treasurer Andrei Shalimov.