Monday, 9 September 2013

Russia Said to Offer Debut Euro Bond With Dollar Sale Before Fed

By Lyubov ProninaMaria Levitov & Vladimir Kuznetsov - Sep 9, 2013 3:30 PM GMT+0400
Russia is offering its first bonds in euros and benchmark debt in dollars, seizing on improved investor sentiment before the Federal Reserve’s meeting that may mark the start of a tapering in stimulus measures.
The government plans two bonds in euros and three in dollars, according to a person with direct knowledge of the offerings, who asked not to be identified because the information isn’t public. Finance Minister Anton Siluanov said Aug. 22 the country was waiting for the “best window” to sell as much as $7 billion of debt.
Russia Said to Plan Benchmark Dollar, Euro Bond Sales Today
The last time Russia issued Eurobonds it raised $7 billion of notes ranging in maturity from five to 30 years. Photographer: Andrey Rudakov/Bloomberg
Emerging-market bonds, which plunged after Fed ChairmanBen S. Bernanke said May 22 the U.S. could start scaling back measures if the employment outlook shows “sustainable improvement,” gained Sept. 6 as data showed America added fewer jobs than forecast. South Africa will sell 12-year bonds, a person with knowledge of the deal said today.
“There’s a window of about a week before the Fed meets and Congress returns, so the sooner the better,” Richard Segal, the head of international credit strategy at Jefferies Group Inc. inLondon, said in e-mailed comments.
The average yield on emerging-market government bonds fell five basis points to 5.52 percent on Sept. 6, after rising 155 basis points since May 22, according to Bloomberg’s USD Emerging Market Sovereign Bond Index.
The rate on Russia’s $3 billion of notes due April 2042 climbed six basis points to the highest level since their issue in March last year to 5.81 percent at 2:54 p.m. in Moscow. The yield has climbed 146 basis points, or 1.46 percentage points, since May and was 5.798 percent at the sale.

Russia’s Rush

“Russia is in a rush, trying to exploit the week before the FOMC meeting,” Aurelija Augulyte, anemerging-markets strategist at Nordea Bank AB in Copenhagen, said by e-mail. “Emerging markets have been hit hard since May, but now we see some signs of panic receding, so it’s a good time for issuers and Russia is clearly one of the strongest sovereigns in the EM space.”
Russia sold $7 billion of bonds last year with maturities from five to 30 years. The government is planning 30-year and 10-year dollar debt at about 237.5 basis points above U.S. Treasury rates, and an issue of about five years at a spread of around 212.5 basis points, according to the person. It also will offer 12-year bonds in euros at about 195 basis points above the mid-swap rate and seven-year notes at about 185.
The Federal Open Market Committee will pare its program of quantitative easing at a meeting Sept. 17 to Sept. 18, according to 65 percent of economists in a Bloomberg survey last month. Investors pulled $27 billion from developing-nation bonds from May 1 to Sept. 4, EPFR Global, a Cambridge, Massachusetts-based firm that tracks fund flows, said in an e-mail Sept. 6.
Russia appointed Royal Bank of Scotland Group Plc, Barclays Plc, Deutsche Bank AG, VTB Capital, Renaissance Capital and OAO Gazprombank as managers of the placement in June.
To contact the reporters on this story: Vladimir Kuznetsov in Moscow at; Lyubov Pronina in London at; Maria Levitov in London at
To contact the editor responsible for this story: Wojciech Moskwa at