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RUSSIA RAISES $5.5BN VIA FIRST EUROBOND SALE FOR DECADE

By NBF News
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The fund-raising should help rebuild confidence in Russia's finances

Russia has raised $5.5bn (4bn euros; £3.5bn) in its first international debt sale since it defaulted in 1998.

Initial reports said that demand for the Eurobond was five times over-subscribed despite investors' growing caution about government fund-raising.

The Eurobond was split between a $2bn issue repayable in five years, and $3.5bn in ten years.

“The placement is rather a success,” said Nikolay Podguzov, analyst at Renaissance Capital in Moscow.

Reports said that the 5-year tranche was priced at 125 percentage points above US Treasury bonds, and the 10-year tranche priced at 135 points above.

Final pricing is expected later on Thursday, and it is possible that Russia could raise more than $5.5bn.

Demand for the Eurobond was high as some investors believe economic growth in Russia could now be stronger than elsewhere in Europe and the US.

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Russian Finance Minister Alexei Kudrin has said that the growth of the country's total economic output, as measured by gross domestic product (GDP), might reach 4% this year, more than the initial official forecast of 3.1%.

The success of the fund-raising is seen as another step towards re-building investors' confidence in Russia since it defaulted on $40bn of debts 12 years ago.

Moody's, the ratings agency, rates Russia's debt Baa1, three levels above non-investment-grade.

Standard & Poor's ranks the country one level lower than Moody's, at triple-B, though still potentially attractive to some professional investors.