Russia sells $7 billion in Eurobonds, meets 2012 target

Wed Mar 28, 2012 3:24pm EDT
 
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By Oksana Kobzeva and Jason Bush

MOSCOW (Reuters) - Russia hit its foreign currency borrowing target for 2012 when it drew strong demand for $7 billion in Eurobonds on Wednesday, in the biggest hard currency denominated issue from an emerging market country since 2000.

Russia was able to sell at the bottom of its previously-announced yield guidance to investors who are currently attracted by the country's strong oil earnings.

"The Eurobond placement could be considered as a real success," said Nikolai Podguzov, head of fixed income research at VTB Capital.

"The pricing was tightened throughout the course of the placement, and demand was shifted towards longer-term securities, which highlights the reasonably strong confidence of global investors in Russian risk."

Andrei Solovyov, head of debt capital markets at VTB Capital, one of the organizers, said the 30-year bond would carry a 5.625 percent coupon for a 5.798 percent yield to maturity under final pricing.

The coupon on the five-year tranche was set at 3.25 percent for a yield to maturity of 3.325 percent and the 10-year paper would carry a coupon of 4.5 percent with a yield to maturity of 4.591 percent, Solovyov said.

A $3-billion 30-year Eurobond was sold at 250 basis points over U.S. Treasuries, $2 billion 10-year paper at plus 240 basis points and $2 billion 5-year Eurobond at 230 basis points over Treasuries, a financial market source said.

On Tuesday, sources told Reuters that the Finance Ministry planned to issue the 30-year paper at 250-255 basis points over U.S. Treasuries, the 10-year paper at 240-245 basis points over Treasuries and the five-year Eurobond at plus 230-235 basis points [ID:nL6E8ES0JU].   Continued...