VEB buys bulk of IFC's debut bond issue in rubles
MOSCOW. Dec 11 (Interfax) - Vnesheconombank (VEB) has purchased the bulk of the International Finance Corporation's (IFC) debut issue of ruble-based bonds, Monish Mahurkar, IFC's Director of Treasury Client Solutions, told Interfax on Monday.
At the end of November, the IFC placed 13 billion rubles in bonds in Russia. VEB invested in these bonds, which are tied to the Russian School of Economics' inflation index. The state bank invested pension funds in these bonds.
VEB confirmed to Interfax that it had purchased IFC bonds but did not specify the size of its acquisition.
Asked whether the IFC bonds are expected to be included in the Russian Central Bank's lombard list, Mahurkar said that one of the requirements for inclusion is that the bonds must be liquid, and it is not yet clear whether the IFC bonds will be sufficiently liquid because their buyers are long-term investors who might prefer to hold them rather than trade them. The buyers, led by VEB, were prepared for the possibility that the bonds might not be included in the lombard list.
The Federal Financial Markets Service (FFMS) registered IFZ bonds totaling 23 billion rubles. The IFC has not yet decided when the remaining 10 billion rubles will be placed, Mahurkar said.
The IFC is swapping part of the funds raised on the Russian market for dollars and will use part for investment projects in local currency, he said.
The IFC called its bonds Volga bonds. The issue of the name was discussed very carefully by the IFC's international team, and the name Volga was chosen because this is a very strong and positive association with Russia, Mahurkar said, adding that civilization was always built around major rivers.
The previous ruble bonds of a foreign issuer, those of Canada's Uranium One, were informally dubbed on the market as Kalashnikov bonds, although the organizers of the issue proposed the more positive Sputnik bonds.
Mahurkar said the IFC is also considering raising funds in local currencies on other markets in Europe and Central Asia. He recalled that the IFC recently placed bonds in the Dominican Republic.