Western markets opened up for Russian companies

Western markets can be opened not only for the companies of the first echelon. “International markets, despite sanctions, is now very receptive to new offerings. I think that the markets are open not only to blue chips, but also for companies of the second echelon from Russia,” says Milic.

This is evidenced, for example, a road-show of Bank. In early March the Bank began a series of meetings with investors, which may place Eurobonds in dollars. Meetings will be held in Hong Kong, Singapore, Zurich, Geneva and London. “Last year, to provide that the Issuer will take in the West would be difficult,” — says the managing Director of the Office of capital markets, Sberbank CIB Olga Gorokhovsky.

Awakened appetite

“Last week I met with investors in London and I was amazed at the changes that have occurred in respect of foreign investors, especially institutional, to Russia,” says Citigroup chief economist for Russia Ivan tchakarov. According to him, the foreigners, who for the last couple of years have not experienced a strong desire to buy Russian assets, again awakens the appetite for Russian companies.

The organizers of this year’s first issue of Eurobonds of the Russian Issuer — Gazprom — acknowledge that you “have not seen such a high demand for securities of Russian companies”. Buyers of the bonds of Gazprom, posted on Wednesday, 16 March, bonds worth 500 million Swiss francs, were made by European banks and funds, and the demand exceeded the offer four times, says the head of debt markets UBS Ranko Milic.

This placement showed that words for foreign investors who in the meeting have repeatedly said that they are ready to buy new issues of Russian issuers, has a real keen interest, adds Gorokhovsky. This is also evidenced by a substantial narrowing of the yield spreads of a number of Russian papers for the last few weeks have shrunk by 30-50 b.p., she said. The narrowing of spreads (difference in yield between, for example, the Russian paper and the Treasury obligation U.S.) means that investors want a smaller premium to buy Russian paper. This usually occurs when there is a growing demand.

Natural demand

“Western investors are yearning for new Russian issues”, — said the head of debt capital markets at VTB Capital Andrey Solovyev. Last year Russian issuers paid on external liabilities of about $19 billion, and new placements were only $4 billion this year, the company will pay another $16 billion, and foreign investors there is a lot of free money that need something to invest, he recalls.

“Neither American nor European issuers of such yields, as Russian companies do not offer, so when the borrower quality from Russia to Western capital markets, its proposal is of great interest”, — says Soloviev.

In addition to a fairly long absence of Russian stocks on Western markets, which created a natural demand for new paper, the increased interest to Russian securities, causing the growth of oil prices, said the Director of the Department of debt capital markets Deutsche Bank Alexey Storchak. At the end of January this year, the price for Brent crude for the first time since 2009 fell below $28 per barrel, since then they have increased by almost 50%.

The recovery in oil prices was the trigger for the return of interest in Russia, but the fundamental reason for the change attitude lies in the fact that the Russian economy “was adapted to low oil prices not just good, but much better than expected,” adds Tchakarov. “The Ministry of Finance and the Central Bank conducted monetary and fiscal policy, can be studied as an exemplary case study of the response of the authorities to the situation when the exporting country should respond to a sharp decline in the cost of basic goods and other external shocks,” he explains.

“This year will definitely be better than the previous one”, — says Soloviev. In his opinion, any high-quality Russian Issuer coming to the Western market, will be able to claim increased interest.