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Interview by Andrey Solovyev, Global Head of DCM at VTB Capital, for Reuters

6 June 2019
Reuters

VTB Capital expects 5-10 Russian companies to issue Eurobonds by year-end

Up to 10 Russian companies could issue Eurobonds by the end of this year, taking advantage of favourable market conditions, VTB Capital's head of debt capital markets said on Thursday.

Russian companies are gradually increasing their presence on the Eurobond market after a slump brought on by Western sanctions that were imposed in 2014 to punish Moscow for its role in the Ukrainian crisis, effectively shutting out some Russian businesses from the global debt market.

VTB Capital, the investment arm of Russia's second-biggest state lender VTB <VTBR.MM>, usually acts as bookrunner for Russian sovereign Eurobond issues and is one of the main organisers of corporate borrowing in the country.

"The market is really good now ... There was a rally in sovereign and corporate Eurobonds. The sanctions theme is losing strength, investors expect good yields. And Russia is the country that keeps on offering good yields," VTB Capital's Andrey Soloviev told Reuters.

Such conditions are likely to be in place until early July and companies will try to tap markets in September after the summer lull, Soloviev added.

"I think we will see 5-10 placements by the end of the year," he said.

Speaking on the sidelines of an annual economic forum in St Petersburg, Soloviev said Russian companies that represent natural resources, energy, infrastructure and metal sectors are among the most likely candidates for Eurobond placements.

"This is what investors understand and are willing to buy," Soloviev said, adding that the bulk of the bonds are likely to be denominated in the U.S. dollar.

Soloviev declined to disclose details of Moscow's plan to issue a sovereign Eurobond this year but said market conditions are also favourable for that.

Russia raised $3 billion in a new dollar-denominated Eurobond and 750 million euros ($842 million) in a top-up issue of an existing euro-denominated Eurobond in March, tapping the global bond market for the first time this year.

The placement took place after Moody's Investor Service upgraded Russia's sovereign rating, meaning it is now rated investment grade by all three big international rating agencies.

The finance ministry and Eurobond organisers typically do not disclose timings of sovereign placements of Eurobonds in advance.

Speaking about the risk of U.S. sanctions against holdings of Russian sovereign debt, Solovyov said he did not expect any such development.

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