Log in
Login
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 

Russian Corporate Bond Issuance To Drop in 2013 But Rosneft To the Fore

share with twitter share with LinkedIn share with facebook
share via e-mail
0
12/20/2012 | 02:17pm CEST
   By Sarka Halas 
 

After a year of record-breaking highs, Russian corporate bond issuance is set to drop next year, but the window remains open for some debut borrowers and an uptick in activity from junk-rated issuers.

It has been a busy year for European emerging markets and Russia in particular, as corporate borrowers from the country issued a record $39 billion in 2012, more than double the $21.7 billion issued in 2011, said analysts at Societe Generale in a recent report.

In an era of historically low interest rates, Russian borrowers saw strong international investor demand for their debt with investors keen to increase their exposure outside of the euro zone's economic crisis, while picking up better returns.

But while 2012 may have been a bumper year, the record levels seen are unlikely to be exceeded in the new year. According to analysts at Raiffeisen Bank, Russian companies need to refinance as little as $9.5 billion in the international debt market.

"We think that Russian banks will be less active in the primary [bond] market next year, due to a contraction in their lending and no significant needs to borrow for foreign exchange purposes," said Alexander Sklemin, credit research analyst at Raiffeisen Bank International.

"However, there may be some opportunistic issuance and a number of players may also tap the subordinated debt market," he added.

NOMOS Bank (NMOS.RS) and Sberbank (>> Sberbank Rossii OAO) are reportedly planning subordinated debt issues. The debt is riskier for investors because it sits low in a bank's capital structure. It is subordinated to senior bondholders. Russian subordinated debt totaled $8.8 billion for 2012 due to regulatory requirements, while 2011 saw just one $800 million subordinated bond sold by Russian Agricultural Bank, said Morgan Stanley analysts in a recent report.

Mr. Sklemin said Rosneft (>> Rosneft' NK OAO) will likely be the largest and most frequent Russian corporate borrower and is set to raise around $7 billion in the bond market as the oil and gas giant looks to fund its $55 billion buyout of TNK-BP.

Besides Rosneft, oil and gas companies will probably be less active on the international bond markets as they will be able to finance their investment spending from cash flows, while the metals and mining sector will likely trim capital expenditures.

Although the market may see fewer of the well-known Russian names in 2013, Mr. Sklemin says that the market is favorable for Russian high-yield credits, including a few debut placements. Fertilizer company PhosAgro OJSC (PHOR.MZ) may issue $500 million as early as the first quarter 2013, while electricity company Inter RAO (>> INTER RAO EES OAO)is also considering a bond placement next year, said Mr. Sklemin.

Russian companies started piling into the international bond market after the government sold 5-year, 10-year, and 30-year debt in international markets in March --opening the market for Russian companies to follow.

This year, Russia accounts for 28% of total international issuance from the Central and Eastern Europe, Middle East and Africa region, and is at its highest share since 2008, when it had 35% of the CEEMEA pie, according to Dealogic data.

Write to Sarka Halas at sarka.halasova@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Stocks mentioned in the article : Rosneft' NK OAO, INTER RAO EES OAO, Sberbank Rossii OAO
share with twitter share with LinkedIn share with facebook
share via e-mail
0
React to this article
Latest news
Date Title
06/24 GERDAU SA : Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in Gerdau S.A. of Class Action Lawsuit and Upcoming Deadline - GGB
06/24 MARKET RISK : What You Don't Know Can Hurt You
06/24 Ratings agency Moody's says Britain at risk of credit downgrade
06/24DJBank Shares Plummet Around the World, but Europe Fares Worst
06/24 GRAN TIERRA ENERGY : Announces Final Voting Results of Its Annual Meeting of Stockholders
06/24 ESTACIO PARTICIPACOES : Notice to the Market - Acquisition of Material Shareholding Interest (FIL)
06/24 KLAS TELECOM : Announces Name Change of its U.S. Government Sales Subsidiary
06/24 Worst day in 10 months as Wall Street reacts to 'Brexit'
06/24 DEUTSCHE BANK AG : DEADLINE ALERT: Lundin Law PC Announces Securities Class Action Lawsuit Against Deutsche Bank AG And Advises Investors With Losses To Contact The Firm
06/24 Frankfurt or bust? Wall St. bankers in London ponder life post Brexit
Latest news
Advertisement
Hot News 
ELECTRO RENT : Platinum Equity Increases Electro Rent Purchase Price Offer to $15.50 Per Share
Incipio Group to Acquire Skullcandy; Create Leading Technology, Creative Culture and Mobile Lifestyle Company
FINISH LINE : Reports First Quarter Fiscal Year 2017 Results
SERVISFIRST BANCSHARES, INC. : Amendments to Articles of Inc. or Bylaws; Change in Fiscal Year, Financial Statements and Exhibits (form 8-K)
LINCOLN NATIONAL : LGBT Employees Engaging More with Workplace Benefits Following Marriage Equality Ruling of 2015
Most Read News
04:46p World stocks tumble as Britain votes for EU exit
12:01p HSBC : UK markets shudder after Brexit vote, sterling hits 31-year low
03:18p Oil prices plunge 5 percent as Britain votes to leave EU
11:41a NOMURA : Britain's financial sector reels after Brexit bombshell
Most recommended articles
05:55p Ratings agency Moody's says Britain at risk of credit downgrade
05:47p Frankfurt or bust? Wall St. bankers in London ponder life post Brexit
05:47pDJHENKEL KGAA : Hopes to Clean Up in U.S. With Sun Products Buy -- 2nd Update
05:46pDJMedpace Files for IPO
05:46pDJBank Shares Plummet Around the World, but Europe Fares Worst