A firm step into CEE with a landmark sovereign transaction for Serbia - USD750m 5.25% 5 year senior unsecured Eurobond Joint Bookrun by VTB Capital.
On November 14th, the transaction was announced to the market as a 5 year USD-denominated benchmark size with 5.625% area yield guidance. Investor interest was overwhelming from the onset and continued to grow exponentially with almost no price sensitivity. Price guidance was revised down to 5.45-5.50% and the transaction ultimately launched and priced as USD750m at 5.45% yield.
Final high quality orderbook was heavily oversubscribed, garnering around USD3.75bn and showed excellent level of granularity with around 160 orders from a solid international investor base. US and UK top-quality Fund Managers in particular demonstrated leadership in the trade. The bonds were placed into top quality hands with Fund Managers allocated 92% of the issue, Banks & Private Banks 5%, and Other (including Insurance Companies) taking 3%. In terms of geographical split, 60% was allocated to the US, 19% to the UK and 21% went to other solid European accounts.
The physical marketing undertaken in the context of this transaction marks the first full roadshow (covering Los Angeles, San Francisco, Boston, New York, London and Munich) for the new Serbian government. The roadshow strategy has proved itself highly successful as over 75% of the bonds were placed in the hands of investors seen on the road.
Riccardo Orcel, Deputy CEO of VTB Group, noted: "VTB Capital continues its international expansion with important transactions in South East Europe. After landmark deals such as the privatization of Bulgartabak and the investment in Vivacom we are delighted to have had the opportunity to assist the Republic of Serbia raising very cost attractive financing in the international markets. This was the first ever Eurobond arranged by a Russian investment bank for a client outside Russia CIS, indeed an important milestone in VTB Capital's international growth strategy."
Andrey Solovyev, Global Head of DCM at VTB Capital, said: "This transaction marks the first deal executed by VTB Capital for a CEE sovereign and the first benchmark size Eurobond for a CEE borrower overall, making this a landmark breakthrough transaction for the franchise. VTB Capital continues to be extremely active in the debt capital markets maintaining its leading rankings position for DCM in Russia/CIS and is successfully stepping foot into Central and Eastern Europe, which is demonstrated by this superb print.”
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