Bank Saint Petersburg might refinance $100 mln in subordinated Eurobonds
MOSCOW. March 27 (Interfax) - Bank Saint Petersburg has not yet decided whether it will fulfil a call option in July on $100 million in subordinated Eurobonds maturing in 2017, and does not rule out issuing subordinated debt instruments in the first half of the year to replace this issue, the lender's deputy CEO, Konstantin Balandin said in a conference call on Monday.
The coupon rate on the bonds is now fixed at 10.5% annually. Under the terms of the issue, the rate increases upon failure to fulfil the option, with a premium of 150 basis points added to the spread to five-year U.S. Treasures set at the time of the initial offering (552 basis points).
"We're still not sure whether we will fulfil the call option or not. Under the current conditions, we pay a coupon of 10.5% on the Eurobonds. Repricing in current market conditions indicates the interest rate would drop by 250-300 basis points. From the economic point of view, recalling the Eurobonds does not seem very wise," Balandin said, adding that the final decision would be made within 30 days prior to the date of the option (July 25, 2012) and would take into account the market environment and accessibility of new loans.
"We will look for opportunities to raise funds through a new issue of subordinated debt," Balandin said.
Asked whether the bank intends to place a new issue of subordinated Eurobonds, Balandin said the market is more or less favourable for such deals, but added he could not say anything more specific about the bank's plans.
He added that the bank does not plan to raise funds on the foreign market with the issue of Eurobonds or syndicated loans. "I would say that subordinated debt is our point of reference, but raising it depends on market conditions; regular borrowing is a goal," Balandin said.
Bank Saint Petersburg placed its 10-year subordinated Eurobonds, totaling $100 million, in July 2007 in a deal organized by JP Morgan and UBS. Coupons are paid semiannually.
The bank is due to repay $506 million in debt in 2012. In addition to the subordinated Eurobonds, this includes ruble bonds.