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Russia and CIS debt markets pipeline

September 18, 2012
Cbonds pipeline is available for download at http://www.cbonds.info/comments/download.php/params/id/82409


The Board of the Bank of Russia approved a hike in the refinancing rate and the rates on the Bank of Russia's transactions by 0.25 pp to 8.25% p.a. effective September 14. Ruble has appreciated on the back of monitory policy decisions by the U.S. Federal Reserve and the Bank of Russia.

This week the pipeline is quite diverse. It has both financial institutions and corporate and municipal borrowers. On September 24-26, UBRD plans to open the book for BO-01 bond in amount of RUR 2 bln. According to issue documents, the coupon guidance is 12.25-12.75%. Renova-StoryGroup announced the offering of series 02 bonds totaling RUR 2.5 bln. Put option will be available after 1 1/2 years. The coupon guidance is in the range of 13.25-13.75%. The issue is guaranteed by the parent company of the group RSG International Ltd. The offering is scheduled for late September - early October 2012. Tula Region opened the book on series 34002 paper totaling RUR 5 bln. First coupon guidance is 8.75% - 9% p.a., which corresponds to a yield of 9.04% - 9.31% p.a.

Last week, Zheldoripoteka sold its debut issue of exchange bonds worth RUR 1.4 bln, having set the coupon rate at 11% p.a. The issue saw only three transactions. LSR Group sold RUR 3 bln in series 03 bonds with demand of RUR 5.5 bln. According to MICEX, there were 86 transactions with the company's bonds. The offering was held in the form of tender for the first coupon rate, which was set at 11.5% p.a. The guidance was in the range of 11.75%-12.25%. VTB 24 sold RUR 6 bln in mortgage-backed bonds on behalf of VEB Capital. Rosbank completed placement of BO-04 worth RUR 10 bln with demand totaling RUR 14 bln. 


The Finance Ministry offered 5-year and 7-year UAH-denominated bonds and 3-year indexed bonds on September 11 in line with the OVGZ auction schedule. The high price of UAH-denominated resources left the first two OVGZ issues no chance. On the contrary, indexed OVGZ attracted investor attention with UAH 160m in bonds sold at auction.

The rally seen last week in the Ukrainian eurobond market boosts likelihood that the Finance Ministry and sub-sovereign borrowers may tap the international markets making them less interested in the domestic market. Therefore, the attractive USD-denominated OVGZ issue is not likely to be offered in the primary market. Taking into account the current turbulence in the UAH-denominated segment curbing interest in UAH bonds, activity in the market will still remain low.

Other CIS countries

Belarus set the refinancing rate at 30% as of September 12. Despite inflation accelerating in August the National Bank cut the refinancing rate by 0.5pp, unlike its Russian counterpart. The National Bank still sees inflation within the target range; it also considers BYR-denominated instruments to be more attractive compared to foreign currency investments. Moreover, the regulator auctioned short-term Series 856 notes to withdraw liquidity from the market. The 7-day bonds were offered at 19.05%. Demand at auction turned to be exceptionally low. The bank managed to raise just BYR 664bn. BYR 3bn worth of other bonds was repaid on the same day. The government of Belarus is eyeing a higher external debt limit. It may be raised by $2bn to $16.3bn (23.1% of GDP) in 2013. The sovereign may use the increase to tap the eurobond market.

The Finance Ministry of Kazakhstan held three government bond auctions last week. At first the Ministry sold KZT 8.6bn in MEOKAM-60 (Issue 35) at 4.8%, and KZT 2bn in MEUKAM-120 (Issue 11) at 5.3%. At the end of the week the Ministry sold KZT 333m in МЕОКАМ-60 (Issue 44) at 4.5%. This week investors will be offered MEUKAM-180 (Issue 7) worth about KZT 15bn.

The Central Bank of Azerbaijan announced higher money supply in January-July 2012. As of August 1 М2 stood at AZN 11.9bn posting a 28% increase y-o-y. М3 grew by 23% to AZN 14.7bn over the year. The Finance Ministry of Azerbaijan sold AZN 2bn in mid-term notes maturing in 3 years and paying 5%. The Ministry also managed to sell AZN 5.74m worth of callable bonds yielding 4%.


Primary market picked up on the back of the global rally. On Monday September 10, Gazprom Neft raised $ 1.5 bln in 10-year Eurobonds. Poland sold sovereign Eurobonds maturing in 2023 in the amount of $ 2bln.

On September 13, Trade and Development Bank of Mongolia placed 3-year Eurobonds worth $ 300 mln yielding 8.625%. Also on Thursday, TCS Bank sold $ 250 mln in three-year Eurobonds at 10.750% p.a. 

On September 13, Zambia issued 10-year Eurobonds in amount of $ 750 mln at 5.625%.

On Thursday EADB placed $ 500 mln in 10-year Eurobonds to yield 4.767%.

Last week, Alfa-Bank and GLOBEXBANK placed 1-year tranches of ECP ($ 140 mln and $ 50 mln, respectively). 

Alfa-Bank is holding a road-show for subordinated Eurobonds in Europe, Asia and the U.S. on September 13-18. 

Gazprombank is looking to issue ruble-denominated Eurobonds; the pricing is expected on September 18. The yield guidance is 8.75-9.00%. Barclays Capital, Citigroup, HSBC, Gazprombank are running the books.

On September 14-18, NLMK is  road-showing its debut Eurobonds in Europe and the U.S. 

The road show of Turkey's dollar-denominated Islamic bonds (sukuk) ended on September 16; the pricing is expected on September 17-18 for the size of USD 1.5 bn.

Hungary will offer dollar-denominated Eurobonds; the road show will be held on September 14-18.