VEB thinking about placement of bonds for $300 million

Vnesheconombank (VEB) plans in the summer to place bonds worth $300 million this writes the newspaper Vedomosti, citing two investment bankers and a representative of the Corporation.

According to the newspaper, the term of the bonds will be 3-5 years and the benchmark rate of the 1st coupon is set at a 5.5–5.75% per annum in accordance with the yield to maturity of 5.58–5.83 per cent per annum.

Sent investbanka description nominal cost of paper is $1000, but all the calculations are made in rubles at the official rate of the Central Bank on the date of the transaction. Ruble issue is only formally, in fact it will be the currency, said the newspaper.

According to credit analyst “Sberbank CIB” Ekaterina Sidorova, primary placement will be in rubles at the exchange rate of the Central Bank on the day of settlement. For maturity of calculations will also be carried out in rubles at the exchange rate on the date that precedes the day of payment of coupons or repayment.

Siderov suggested that the money from the placement will go to servicing the debt of the non-public group of companies, as well as to Finance current commitments for the issuance and liquidity of the Bank. Despite the problems of the Bank, its bonds are in demand, said Sidorova, and cited the example of the last placement of three-year bonds to VEB 15 billion rubles in April. The demand amounted to RUB 20 billion, the rate of 10.9%.

In June, “Vedomosti” wrote on the new strategy of the Bank, which intends intends to obtain funds in the capital to attract cheap long-term funding, including from the national wealth Fund and the Central Bank to obtain funds to subsidize interest rates on loans and use funds of government programs. The Bank considered the option market financing (e.g. pension funds and domestic bonds), however, as noted by an employee of the Bank, it’s too expensive.