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LONDON, March 29 (Itar-Tass) — Russia on Wednesday successfully placed sovereign Eurobonds worth 7 billion US dollars, sources in the City of London reported.
Three issues of Eurobonds were placed simultaneously. Five-year bonds were issued to the tune of two billion dollars with a yield of 3.325 percent per annum and the coupon with 3.25 percent per annum. Ten-year bonds –worth two billion dollars with a yield of 4.591 percent per annum and coupon of 4.5 percent per annum. Thirty-year bonds – worth three billion dollars with a yield of 5.798 percent per annum and coupon yield of 5.625 percent.
When Russia previously placed 30-year sovereign bonds in 2007, their yield was 7.5 percent, British commentators say.
The yield of five-year Russian bonds is by 230 basis points higher than of similar US securities. The price guidance on 10-year Eurobonds is 240 basis points over American securities. The difference in yields on 30-year bonds is 250 basis points over US bonds.
The yield on Russia’s 10-year bonds will be only 60 basis points higher than for similar securities of South Africa, despite the fact that the sovereign rating of the country (BBB +) at the moment is higher than that of Russia (BBB).
According to analysts, these relatively low rates of return indicate that world markets regard Russia as a reliable borrower. “Our view is that relative to peers the bonds are cheap. Given the strength of the economy and the low indebtedness of the sovereign it certainly makes sense to invest,” Werner Gey van Pittius, portfolio manager at Investec Asset Management in London, an emerging bond fund that invested in the issue, told Reuters.
“The Eurobond placement can be considered truly successful. In the process of placing their profitability has declined, the demand has shifted towards the longer-term securities, which emphasises the relatively high confidence of global investors in the Russian risk level,” analyst of VTB Capital Andrei Solovyov believes.
British commentators say that the current issue of Eurobonds has allowed Russia to fulfil the annual plan of foreign borrowing, which in 2012 amounted to seven billion US dollars.