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CIS step up activity on the Eurobond market 

posted onOctober 9, 2019

It was a busy September for bond markets in the Commonwealth of Independent States (CIS). Ninteen Eurobonds were issued last month according to Saint Petersburg-based Cbonds, which covers the fixed income in the developed and emerging markets.

Bond issuance in the CIS reached $23.3bn in the first nine months of this year with 91 issues and surpassed volume of $17.4bn with 54 issues during the same period last year.

Russia topped country ranking once again, issuing a total of $16.6bn in the first nine months of this year against the $9.2bn it issued in the same period last year, The country accounted for 14 of the total 19 bonds issued in the CIS in September 2019 totalling $3bn with Russian deals being dominated by corporates.

Severstal, one of Russia’s largest producers of iron ore and coking coal, on September 9 issued international bonds (XS2046736919) with a 3.15% for  $800.0m maturing in 2024. Bonds were sold at a price of 100%.

Sibur, the largest Russian integrated petrochemicals company, on September 23 offered
Eurobonds due 2024, raising $500 million in gross proceeds. The coupon rate was set at 3.45% per annum.

According to Sibur, its new Eurobonds were oversubscribed by more than 2.5x with the total demand exceeding $1.3 billion. The Eurobonds were purchased by global investors, more than a half of which were foreign (Russia, 41%; Continental Europe, 26%; Asia and MENA, 15%; the UK, 11%; the USA, 7%).

Russian Railways (RZD), the state-controlled railways operator, issued a bond of CHF300 that matures in October 2025 and pays 0.898%

Chelpipe, a leading Russian manufacturer of tubular products, went through with its first Eurobond issue (total amount: $300m); coupon yield at 4.5% a year; maturing in September 2024. 

According to ChelPipe Group’s press service, the company’s good credit history and  favourable market conditions attracted a great number of investors during the five-day road show in Moscow, Zurich, Frankfurt, New York, and London 

The Group intends to direct the money to early repayment of ruble loans in order to improve its debt structure. 

Eurobonds CIS

Other prominent bond issues in September was a Kazakh sovereign issue of €650mn that matures in 2034 and pays 1.5%. Armenia also issued a sovereign of $500mn for early repayment of its existing debt. The bond will mature in 2029 and yields 3.95%.

More bond issues are expected to take place, as CIS firms and states can capitalise on lower borrowing costs as central banks around the world are cutting interst rates in an effort to support economic growth.

“Investors are looking into where they can earn more in such conditions, and emerging markets, including Russia, are in focus in that sense,” Stanislav Bozhenko, an analyst at VTB Capital, one of the main organisers of corporate borrowing in Russia,  told Reuters. 

Russia’s central bank cut rates on Sept. 6, followed by the European Central Bank. Later in September, the U.S. Federal Reserve followed suit.

Commonwealth of Independent States (CIS) are Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Armenia, Moldova, Russia, Tajikistan, Uzbekistan

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