The Railways closed the order book, reducing the initial benchmark yield from 4% to 3.45% per annum, the materials distributed to investors in the placement (at the disposal). The demand for paper state-owned companies worth $500 million was oversubscribed 8 times and amounted to more than $4 billion by the Organizers of the transaction are VTB capital and JP Morgan.
Earlier in the week Russian Railways the beginning of the road show, offering investors a four-year dollar-denominated Eurobonds. The company plans to use the proceeds from the placement to repay previously issued debt. As previously mentioned , 19 Sep RZD Capital P. L. C., a subsidiary of Russian Railways, announced the offer on redemption of Eurobonds totaling $1.5 bn maturing in 2017 and 525 million francs with maturity in 2018.
Last time, the Railways had placed Eurobonds in February 2014. Then the company sold to the investors bonds maturing in 2023, $500 million through the Irish stock exchange. The yield output was 4.6% per annum.
Now Russian Railways Eurobonds maturing in 2023 traded at a price 10% above face value, yield is 2.7% and 2.9%. The yield on the Eurobond issues maturing in 2017 and 2018 is 1.2-1.9% per annum.
Railways became the first Russian company that entered the market of external borrowing after the Ministry of Finance placed sovereign Eurobonds worth $1.25 billion demand for the bonds of the Ministry of Finance six times oversubscribed, and the yield of production was 3.9% per annum. Prior to that, Russia placed Eurobonds on the international market in may this year. It was ten-year bonds for $1.75 billion under 4.75% per annum.
“Obviously, the success of sovereign Eurobonds have been the incentive for other issuers. What is Russian Railways — quite logically, since it is a quasi-public company”, — says Director of debt capital markets at ROSBANK Anton Kiryukhin. According to him, after the Railways expect mass placement of Eurobonds by other companies. “Russia still looks the most attractive market among other emerging markets (the emerging markets. —) . Investors are willing to buy it, companies rush to take advantage of it,” — said the banker.
Placement of Eurobonds of the Ministry of Finance will push Russian companies to be active on the international capital market in October-November, said the head of debt capital markets “VTB Capital” Andrey Soloviev. The investment banker said the appetite of U.S. investors, including large Russian assets in recent months.
“I think, and other quasi-public borrowers can use the good window open by the Ministry of Finance. Traditionally, investors have a very positive attitude to natural resources, metals, chemicals, overall — the real economy — said Solovyov.
Soon investors expect, as well as placing another issue of Eurobonds of Russian Railways. The company intends to offer seven-year paper denominated in rubles. “Such Eurobonds is mainly intended for foreigners who need to “correct” the Anglo-Saxon law and settlement through Euroclear,” — said General Director UK “Satellite asset Management” Alexander Losev.
Also it is planned to place dollar-denominated Eurobonds of “EuroChem”. The company intends to place new Eurobonds for a period of 3.5 years. The organizers of a series of meetings with investors and possible placement are Citi, Goldman Sachs, HSBC, ING, J. P. Morgan and Sberbank CIB. Previously, the company has also announced its intention to redeem Eurobonds issue with maturity in 2017 for $750 million.