19 Jun 2009 18:14

VTB puts Eurobond plans on hold over unfavorable terms

MOSCOW. June 19 (Interfax) - VTB , which held a series of meetings with foreign investors last week, has put plans to place Eurobonds on hold because investors were offering unfavorable terms, a source at one of the banks that organized the meeting told Interfax.

"They haven't shelved the placement altogether, they've just decided to put it on hold," the source said.

Reports said VTB was thinking of offering between $1 billion and $2 billion in Eurobonds at approximately 9% pa. It was thinking of offering seven-year bonds with a three-year put option.

The source said VTB would readdress the bond placement depending on the market. "The situation isn't very good right now - the terms aren't quite as good as they were when Russian Agriculture Bank placed bonds. A final yield was not named - opinions were exchanged at the meetings with investors. VTB listened to what the investors had to say and decided it didn't need money at that price," the source said.

The source was not willing to say what yield VTB had suggested.

He also said the size of the offering had played its part. "You could have placed on the terms that VTB wanted but the potential volume would have to have been smaller. But VTB didn't think it would make sense to offer a smaller volume," he said.

Deutsche Bank, JP Morgan, Citi and VTB Europe arranged the meetings with investors.