Zee Beam News

19.05.2005 15:47 MSK MosNews - The European Bank for Reconstruction and Development said on Wednesday, May 18, that it has placed its first issue of ruble-denominated bonds amounting to 5 billion rubles ($178.6 million) and maturing in 2010. The information was reported by the Russian Time of News (Vremya Novostei) newspaper. The EBRD placed its bonds at par value by closed subscription among 12 Russian and foreign underwriter banks. The bond issue was arranged by the Russian structures of Raiffeisen Bank and Citigroup. The bonds carry a floating coupon rate pegged to the MosPrime Rate index (the average of interest rates, at which the group of banks participating in the index is ready to provide loans for a term of one to three months to top financial institutions). The index was specially developed for the EBRD by the National Monetary Association. The first coupon rate is based on a 4.04 percent index of annual interest. T his is an extraordinary event for the Russian market because a top-class borrower with the AAA/Aaa rating is joining it. The EBRD expects its papers to be traded soon on the Moscow Interbank Currency Exchange (MICEX) and will be included in the Bank of Russia pawn list. The EBRD clearly expects that the market will welcome the new bonds. However, investors have until now been skeptical about top papers of western issuers. Recently, Germany's EssenHyp Bank offered AAA/Aaa mortgage bonds to Russian market players. Rosbank Head of Debt Market Analysis Pyotr Grishin said that the EBRD bonds will be of interest for foreign investors. "Foreigners still hold the view that the ruble has potential for appreciation. Net foreign exchange investment is not quite a good thing, while foreign exchange risks in Russia are actually neutralized by risk-free ruble bonds." But Aton Capital analyst Alexei Yu thinks domestic banks will show as much interest as their foreign counterparts. "Russian banks will clearly not show strong demand," Yu said, noting it is more advantageous for them to be refinanced with the use of the Finance Ministry's bonds, which offer both higher rates and liquidity.