US Investors Buy Half of Russia’s New $1.25 Billion Eurobonds Issuance
Russia entered the international capital market for the second time this year, taking advantage of the lucky global environment and good appetite for Russian bonds despite Western sanctions against Moscow.
On Thursday, Russia successfully issued $1.25 billion in 10-year Eurobonds, according to the Russian Finance Ministry.
«We saw great interest from investors. New Eurobonds were issued only for foreign buyers, including 53 percent from the United States, 43 percent from Europe and 4 percent from Asia,» Finance Minister Anton Siluanov was quoted as saying by RBK.
The finance ministry decided to issue an option in Eurobonds after privatization of oil companies Bashneft and Rosneft was delayed for an indefinite period.
The offer price reached 106.75 percent from the issuance, which accounts for an annual yield of 3.9 percent.
«The issuance was successful. Initially, 106 percent was expected but high demand allowed for improving the borrowing terms. By the time the order book was closed demand was six times higher than supply, reaching over $7.5 billion,» Alexander Losev, CEO at Sputnik-Capital Management, told RBK.
The bonds were issued exclusively for foreign investors. Market players noted that the ministry picked up a very lucky time for the issuance and offered a discount to attract more investors.
«The ministry chose the right time to issue Eurobonds because currently the yield on Russian obligations is extremely low,» Anton Kiryukhin from Rosbank said.
For the first time in 2016, Russia entered the debt market in May. The country issued $1.75 billion in 10-year Eurobonds, with an annual yield of 4.75 percent. This was the first time Russia entered the global capital market since Autumn 2013.
Despite the fact that Western sanctions against Russian do not include state borrowings, they have had an impact on bond issuance, Peter Kinsella, an analyst at Commerzbank AG, said. At the same time, Kinsella underscored that demand was high for Eurobonds because investors are interested in high-yielding assets. «In the current situation, Russia could have issued even more Eurobonds because there is demand from investors. Moreover, those bonds can be traded on Western stocks, which gives them additional liquidity,» Evgeniy Kochemazov from Alfa-Capital said.