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Comments by Andrey Solovyev, Global Head of DCM at VTB Capital, for IFR

22 November 2019

RusHydro develops Eurorouble habit

RusHydro returned to the Eurorobule market last Monday, selling a Rbs15bn (US$235m) five-year at 6.80% as part of a refinancing exercise.

The Russian utility, infrastructure and hydropower generating company failed to hit the tight end of final guidance of 6.75%-6.875% but did manage to come comfortably inside initial thoughts of 7%-7.15%.

"The final coupon was set at 6.8%, which is a record low for a rouble Eurobond issued by a Russian corporate," said Andrey Solovyev, global head of debt capital markets at VTB Capital, one of the leads.

RusHydro's longest Eurorouble before was a Rbs20bn 8.125% September 2022 note, which was quoted at 6.62% before IPTs were announced on the latest deal.

The company has made a habit of printing Euroroubles. Its last sale in the format came at a similar time last year, when it sold a Rbs15bn (US$228m) 8.975% January 2022 bond, with Russian buyers taking almost two-thirds and Asian accounts the rest.

This time round, Asian and Russian accounts both took 43%, with 14% going to investors from Europe and the UK.

The order book was more than four times subscribed, reaching over Rbs70bn at its peak, with 45 investors submitting bids. The books dropped off a touch through the later pricing steps, falling to Rbs64bn.

RusHydro is rated Baa3/BBB-/BBB-. It is 61.2% directly owned by the Russian government, with a floor on its ownership level set at 60.5%.

Gazprombank, JP Morgan and Sberbank CIB were the other leads and bookrunners.

In liability management, Russian Railways is offering to purchase up to US$250m in aggregate of its 2022s and 2024s dollar bonds and sterling 2031s.

The offer expires on November 26.

JP Morgan and VTB Capital are dealer managers.

VTB Capital

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