Sberbank is widely expected next week to bring out one of
the highest-profile bond issues from a Russian bank so far this
year, amid a big push by lenders in the country to regain
access to international funding despite continued volatility in
the debt markets.
The state-owned banking champion, which last printed a
eurobond in June 2008, is expected to launch a
dollar-denominated issue after meeting European investors on a
Although debt issuance from the financial sector in
Western Europe has been all but shut by sovereign debt concerns
in the past month, few bankers or investors believe A3/BBB
Sberbank would have little difficulty in raising external
On Wednesday, lesser-known borrower Credit Europe Bank
Russia sold a $200 million three year deal, with a two year
put. It was the first Russian issuer to test the waters since
the sovereigns $5.5 billion return to the international
markets on April 22.
The market is open for the large CIS borrowers,
although execution has to be timely, said Alan Roch,
emerging market syndicate director at Royal Bank of Scotland,
which arranged the investor meetings along with DZ Bank and
JPMorgan. The lead banks maintained that the roadshow was not
deal specific, however, and that a bond may not emerge from
But demand for CIS-related debt has not been dented by Greek
worries, nor by a bumpy comeback for the Russian sovereign with
its issue. Its first deal since 1998, when Russia defaulted,
sank in the secondary market after pricing.
Roch added that investors were still receptive to Russian
and CIS names, saying that many large funds were calling for a
reallocation into emerging markets, attracted by good
growth prospects, strong fundamentals and well-positioned
companies and financial institutions.
These same arguments have opened up the investor base for
the top names in Russia to crossover and investment-grade
buyers, as shrinking yields begin to alienate the more
traditional emerging markets accounts. Ian McCall, director at
Argo Capital Management, said most of the deals now emerging
from Russia, including Sberbank, were simply too
Weve looked at some of the recent deals, like
the Nomos Bank [8.75%] subordinated bond, but would rather pick
up something like Alfa Bank Ukraine at a yield of say
15%, he said.
A range of Russian banks, including TranscapitalBank, Bank
Zenit and Credit Bank of Moscow are now testing the waters in
the international syndicated loans and bonds will deal requests
and proposals, despite funding being available more cheaply in
the domestic rouble market.
Promszvyazbank (PSB) is set to sign a $250 million loan in
June, the first of the year from a Russian borrower. Anna
Belyaeva, a director at PSB, said the EBRD, which has an 11.75%
stake in the bank, was keen for it to set a benchmark for other
financial institutions in the country. With an all-in margin of
340bp over Libor, Belyaeva added that pricing had become
pretty interesting compared to a year ago.