Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexEconomic EventsPress releases

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
Latest news "Economy & Forex"
03:33a MINISTRY OF ENVIRONMENT OF BRITISH COLUMBIA : Motorists urged to park legally at Coquihalla Canyon Provincial Park
03:28a APO ASIAN PRODUCTIVITY ORGANIZATION : program for rural revitalization
03:28a APO ASIAN PRODUCTIVITY ORGANIZATION : concludes conference on policies for productivity growth
03:18a APEC ASIA PACIFIC ECONOMIC COOPERATION : Tightens Illegal Timber Trade Controls
03:18a SUNSHINE COAST REGIONAL COUNCIL : UnitingCare to share energy saving insights during Cleantech Effect
03:16a Dollar index steady; Jackson Hole meeting in focus
03:16aDJNEWS HIGHLIGHTS : Top Company News of the Day
03:16aDJNEWS HIGHLIGHTS : Top Global Markets News of the Day
03:08a MINISTRY OF AGRICULTURE OF PEOPLE REPUBLIC O : Farmers take measures against armyworms attack in north China's Hebei
03:02a BHP says plenty of buyers interested in its shale assets
Latest news "Economy & Forex"
Advertisement