05 February 2019, 18:36 / Finance

MKB is preparing to borrow in euros for the first time

It will become the second Russian bank to place Eurobonds this year: issuers are rushing to take advantage of the favorable market situation Anna Tretyak

The last time MKB entered the foreign borrowing market was a year ago / Mikhail Pochuev / TASS

The Moscow Credit Bank (MCB) will begin holding meetings with investors on February 7 in preparation for the placement of Eurobonds, an investment banker who received a notification from the organizers of the issue told Vedomosti, and a bank representative confirmed it.

MKB plans to place bonds denominated in euros, the maturity of the securities will be from three to five years, a bank representative indicated. The placement organizers will be Citi, Societe Generale, ING, Sova Capital and Gazprombank .

The last time MKB entered the foreign borrowing market was a year ago. In February 2018, it placed five-year Eurobonds for $500 million. In total, there are four issues of MKB Eurobonds in circulation for $2.2 billion, as well as a Eurobond issue for 5 billion rubles.

MKB will become the second Russian bank to enter the external debt market this year. Last Wednesday, January 30, Eurobonds worth 10 billion rubles. posted by Alfa Bank. The yield on the securities was 9.35% per annum, with a maturity date of August 2022. Demand for the securities exceeded supply by more than 2.5 times, which made it possible to reduce the yield target from the initial level of 9.5%, the bank reported. The main buyers of Alfa Bank's Eurobonds were investors from the UK and Russia.

Russian issuers, including banks, are rushing to take advantage of the favorable market situation, says Evgeniy Shilenkov, director of the active operations department at Veles Capital: the shutdown in the United States continues, there are no new statements on sanctions yet, the Fed is silent about a further rate increase, and demand for securities emerging markets is growing, and bonds of Russian issuers are among the leaders in price growth, he lists.

MKB may well count on high demand, although the main buyers will most likely be Russian investors, Shilenkov believes: “Due to the reduction in placements last year, the Russian debt market has narrowed and pent-up demand has accumulated among investors, while foreign investors still have quite limited limits on Russian bonds." It is quite possible that MKB is also planning an issue targeting the group’s corporate clients, he adds.

Vedomosti sent inquiries to Citi, Societe Generale, ING, Sova Capital and Gazprombank .