The demand for Russian Eurobonds is five times oversubscribed


A source in the investment company involved in the purchase of Eurobonds of the Finance Ministry, said that the volume of orders received from investors, was significantly above the planned volume of placement. Information about the increased demand was confirmed by a source in another investment company.

“The oversubscription amounted to $5.5 billion, while the organizers wanted to place at least $1 billion,” — said one of interlocutors who knows about this from the organizer of the placement — “VTB Capital”. A source in one of the state banks said the order book was close already in the middle of the day. “But, apparently, the Finance Ministry wants to expand the circle of holders of Eurobonds,” he says.

Managing a large investment Fund said that “VTB Capital” would like to attract investors from Asia. “But they have now no bidding, so the book is scheduled to close in the morning, when China and Singapore opens the exchange”, — he explained. The financier does not exclude that the accommodation can participate quasi-public funds from the Middle East and Asia. “I have no doubt that the deployment is successful, the only question in premiums to pay investors,” he says.

Previously, experts have predicted an increased demand for sovereign Eurobonds of Russia. According to analyst UK “the alpha the Capital” Vladimir Bragin, due to the fact that not long ago housed a high-quality issuers out of Russia. “Over the past couple of years, the market of the Russian Eurobonds shrank by 20%,” he said. However, as noted by the analyst of Raiffeisenbank Denis Poryvai, an increased demand for Eurobonds can be part of the Russian banks, the accounts of which the accumulated excess foreign exchange liquidity.

According to the Ministry of Finance planned to place Eurobonds for a period of ten years. The benchmark yield — 4,65–4,9% per annum. Under the terms of the placing, payments to investors can be held as us dollars and other currencies. Also in the prospectus (have) contains a condition that the Finance Ministry does not allocate funds received in the projects and companies came under the sanctions.

The intention of the Russian authorities to place Eurobonds became known in February 2016. Then the Finance Ministry has sent 25 foreign banks, including Barclays, BNP Paribas, Bank of America Merrill Lynch, Goldman Sachs, JP Morgan, applications for the organization of a possible offering of securities.

As reported by the Financial Times and The Wall Street Journal, citing its own sources, the authorities of the EU countries and the USA recommended that credit institutions do not participate in the placement. Later it became izvetsno that none of the foreign banks have not agreed to the proposal of the Ministry of Finance.

The last time Russia took on the international markets in September 2013, when they were sold the paper for $6 billion.