Issue: 1113 - 17 July 2009
VTB Capital has placed a further $28.25m of ECP for Alrosa, Russia’s largest diamond company. The issue, which is VTB’s third for Alrosa, was placed with both international and local investors. The duration of the notes is six to 12 months.
VTB Capital joined UBS as a dealer on the Alrosa’s ECP programme in May 2009.
"In less than two months we have arranged three ECP placements raising $183.25m for the company," said Andrey Solovyev, global head of debt capital markets at VTB Capital.
UBS, which has been issuing commercial paper for Alrosa for more than four years, has placed $180m for Alrosa in six tranches this year. There is $275m of ECP placed by UBS that remains outstanding.
"VTB has been successful in placing notes for Alrosa because it managed to come in with a new investor base for this product: selling it to Russian accounts," said one London-based CP dealer.
"Only certain investors can take on paper with this lower credit rating, so the investor base to sell this into outside Russia is small."
Several London-based dealers say that demand for emerging markets commercial paper is extremely limited, particularly as several of these economies face grave difficulties in their financial and construction sectors.
However, as previously reported, VTB plans to bring more Russian issuers to the ECP market. It also intends to place notes — including structured trades in its own name — into the EMTN market.
State-owned Russian energy company Gazprom is expected to tap the CP market for funding in September.
Head of Press