RZD places 10-yr Eurobonds, takes advantage of unmet demand for Russian LPN
MOSCOW. March 30 (Interfax) - OJSC Russian Railways (RZD), in placing $1 billion in ten-year Eurobonds on Thursday evening, has taken advantage of the unmet demand for Russian sovereign Eurobonds with the same circulation period, which were placed earlier this week.
Head of the debt capital market division at VTB Capital (one of the organizers for Russia's and RZD's Eurobond placements) Andrei Solovyev told Interfax that the bid book for RZD's Eurobonds came to $3.2 billion.
Earlier this week, the Russian Finance Ministry placed Eurobonds in three tranches - five-year, ten-year and 30-year. Demand for the ten-year Eurobonds totaled $6 billion, compared to only $2 billion that were actually placed.
"For the ten-year tranche of sovereign Eurobonds, demand was $6 billion. This is why investors whose bids were not satisfied were happy to shift their funds to RZD securities - especially since this is the closest risk to Russia," Solovyev said.
This high level of demand caused yield guidance to noticeably drop twice during the course of one day, by a total of 17.5 basis points - from 5.875% to 5.7%, he said.
In addition, investors from Great Britain, continental Europe and offshore American accounts each took roughly a quarter of the issue. Swiss buyers bought 11%, Asian purchasers took 10% and Russian investors 5%.
Asset managers acquired 72% of the issue, private banks took 12%, commercial banks bought 10% and hedge funds wound up with the remaining 6%.
As reported, RZD placed $1 billion worth of ten-year Eurobonds at 5.7% per annum. This is the lowest coupon on ten-year Eurobonds ever placed by non-sovereign issuers from Russia and the CIS.
The bond offering was organized by JP Morgan, RBS and VTB Capital. The bonds were issued by RZD Capital Limited.
Last week, RZD placed 25 billion rubles in seven-year Eurobonds at 8.3%, lowering yield guidance twice during the road show. The company was planning to re-enter the market immediately after the Finance Ministry.
Russia placed $7 billion in Eurobonds in three tranches on Wednesday - five-year ($2 billion, 3.325%), ten-year ($2 billion, 4.591%) and 30-year ($3 billion, 5.798%).
RZD plans to borrow a total of 100.3 billion rubles in 2012 through bond placements on Russian and international markets.
