11 Apr 2019 11:31

Foreign investors snap up almost 80% of new STLC Eurobonds

MOSCOW. April 11 (Interfax) - Foreign investors were the main buyers of the new issue of dollar-denominated Eurobonds from Russia's State Transport Leasing Company (STLC) , snapping up almost 80% of the placed amount, data from Gazprombank , one of the organizers of the deal, show.

STLC raised $500 million on Wednesday with the placement of six-year Eurobonds with a coupon yield of 5.95%. The placement price was 99.132% of face value, which corresponds to an annual yield of 6.125%.

The initial yield guidance for the offering was 6.375%-6.5%, which was later lowered to 6.25% and finally reduced to 6.1%-6.2%. Demand for the bonds in the course of the deal exceeded $1.5 billion.

"The quasi-sovereign status of the borrower and the company's successes in diversifying its business had a positive impact on investor interest. The company carried out an intensive roadshow in London, Zurich, Frankfurt and Moscow from April 5 to 9, meeting with several dozen target accounts. It's important that big-name accounts showed interest already at the stage of meeting with investors, and questions concerned not so much current challenges as much as strategy and the company's effectiveness in reequipping and modernizing the Russian economy, foremost the transport sector," Gazprombank senior vice president Denis Shulakov told Interfax.

He said 21% of the issue was bought by Russian investors; 44% by investors from continental Europe, including 17% from German and Austria, 18% from the UK and 8% from Switzerland; and 5% by offshore American investors. Investors from Asia, the Middle East and North Africa bought 4%.

"The company entered the market just at the right time: at the moment of the placement secondary levels of outstanding Eurobonds, spreads to mid-swaps, were at their lowest in several months," Shulakov said.