Russia returned to international debt market


Monday, 23 may, Russia announced the deployment on the international Eurobond market. “Production is carried out according to the program of external borrowings in accordance with the law on the budget for the current year”, — says the official report of the Ministry of Finance. The organizer is assigned to “VTB Capital”. The Agency Bloomberg with reference to its source reports that the expected profitability of Eurobonds is 4.65 to 4.9%.

A source close to VTB Capital said that the order book may be closed on Monday. A source in one of banks does not rule out that “VTB Capital” can try to place the entire amount planned for this year by the Ministry of Finance of Eurobonds of $3 billion, “the Demand for foreign currency bonds of Russian issuers are now elevated,” he notes.

In February 2016, the Finance Ministry announced that it sent the 25 foreign banks, including Barclays, BNP Paribas, Bank of America Merrill Lynch, Goldman Sachs, JP Morgan, applications for the organization of a possible placement of Eurobonds in 2016. After that, The Wall Street Journal and the Financial Times reported that American and European authorities have given banks the recommendation to refrain from posting.

As written, the application form for participation in the placement of Russian sovereign bonds filed one of the largest investment banks — Goldman Sachs. This happened before recommendation not to participate in the organization of the sale. In the end, the Bank began to look for a way to withdraw its application.

In March, the EU warned European banks from the placement of Russian Eurobonds, reported the Financial Times referring to sources in banks. Previously, the newspaper The Wall Street Journal wrote that the us government has warned the big banks the United States from participation in placing of the Russian Eurobonds. In Washington felt that it was contrary to the sanctions policy against Moscow. Then the publication reported that not all banks were already defined with the further actions. According to the source, J. P. Morgan Chase has considered the possibility of filing, but in the end the Bank’s management decided not to do so, and Bank of America Corp., Citigroup Inc., Morgan Stanley and Wells Fargo & Co. initially said its refusal.

Bloomberg in mid-April announced that Russia will postpone the placement of Eurobonds, planned for this year because of the sanctions the US and the EU, as well as failures of banks to participate in the placement. According to sources, the Agency plans to attract $3 billion would cover a tenth part of the budget deficit this year. The sources said that in recent months, Russian authorities considered a variety of ways that would circumvent the restrictions the US and the EU, including the placement in Swiss francs and yen. However, officials noted, Moscow has not been able to find a sufficient number of banks and investors that have expressed a desire to participate in the offering in the context of fears of sanctions.

Finance Minister Anton Siluanov also admitted admitted that Russia has had difficulties with accommodation. “Yes, now really built the machinations of this issue, many banks refuse. However, the window for such opportunities we are not blind, are working in this direction”, — said the Minister in early April. However, he noted that Russia wanted just to “feel out the market, to participate in this market is that investors saw our presence there”.

Last week, the head of VTB Andrey Kostin said that Russia will cope with the placement of Eurobonds in the current year without the participation of foreign banks. “I admit that VTB fully accommodated. While to speak early” — he told reporters, may 20, answering the question, is there a possibility of placing of Eurobonds of the Russian Federation without participation of foreign banks (quoted by “RIA Novosti”).

The last time Russia took on the international markets in September 2013, when he sold the paper for $6 billion, maturing in 2019, 2023 and 2043, respectively. Since then she has not appeared in international capital markets because of Western sanctions imposed after the annexation of Crimea, which effectively closed the country to foreign debt markets.