Log in
E-mail
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
Latest news
Date Title
08:29p ECOLOGY AND ENVIRONMENT : Reports Summarize Ecology and Informatics Study Results from Shandong Agricultural University (Digital image analysis of different crown shape of...
08:29p UNISYS : U.S. Department of Agriculture Rural Development Awards Unisys Secure Application Services Contract Worth Up to $232 Million
08:29p KYOCERA : Patent Issued for Mobile Communication Method, Radio Terminal, and Base Station (USPTO 9420621)
08:29p RIKEN TECHNOS : Patent Application Titled "Transparent Multilayer Film Containing Poly(Meth)acrylimide-Based Resin Layer, and Method for Producing Said Transparent...
08:29p GALP ENERGIA : “GALP ENERGIA” 2013/2018 14th coupon payment
08:29p SPLUNK : & The City of San Diego at Gartner Catalyst
08:29p MINISTRY OF AGRICULTURE LIVESTOCK & FISHERIES OF : Government launches Livestock Insurance Program
08:29p LOCKHEED MARTIN : Names Greg Gardner Vice President, Investor Relations
08:29p BEER INSTITUTE : Releases july domestic tax paid estimate
08:28p RECENT REPORTS FROM IMPERIAL COLLEGE HIGHLIGHT FINDINGS IN MEDICAL ULTRASOUND (SURFACE CHARGE MEASUREMENT OF SONOVUE, DEFINITY AND OPTISON : A...
Latest news
Advertisement
Hot News 
-16.88%AHEAD OF THE TAPE : Dollar Stores Have Surprise Lift -- WSJ
-12.23%SIGNET JEWELERS : Why Are Americans Buying Less Jewelry?
4.44%AMCOR : Flags Growth Ahead after Net Profit Falls 64%
-5.61%MICHAELS : Cuts Outlook After 'Choppy' Environment in First Half
-1.43%MEDTRONIC : Profit Rises, Helped by Lower Expenses
Most Read News
09:15a CATERPILLAR : U.S. core capital goods orders surge; jobless claims fall
08/24DJOil Prices Fall as U.S. Crude Inventory Data Disappoints
01:16a NOVARTIS : announces positive phase III results showing efficacy of BAF312 in patients with secondary progressive MS
08/24 VERINT : Ex-Comverse CEO pleads guilty to fraud, a decade after fleeing to Africa
08:35aDJSIGNET JEWELERS : Why Are Americans Buying Less Jewelry?
Most recommended articles
02:23pDJCrop Forecasters Take Matters Into Their Own Hands -- Literally
02:15pDJVOLKSWAGEN : Reaches Pact With U.S. Franchise Dealers Hurt by Emissions Scandal
02:11p U.S. SEC fines 13 advisers for false claims involving F-Squared
02:06pDJStocks Slip as Investors Look to Fed's Jackson Hole Meeting
01:55p FIRST NATIONAL OF NEBRASKA : U.S. fines big Nebraska bank over credit card, ID theft marketing