IIB issues largest ever bond on Moscow Exchange

IIB issues largest ever bond on Moscow Exchange
By bne IntelliNews November 25, 2015

​The development bank, the International Investment Bank (IIB), placed its biggest ever ruble- denominated bond on the Moscow Exchange on November 19 worth RUB5bn ($76mn/€70mn), the bank said in a press release.

Dubbed the "EBRD of the Soviet Union", the bank was set up in 1970 to promote cross-border cooperation and investment, but has transformed itself since 1991. In 2012, it launched a new strategy, changed its staff and has been emerging as one of the more active development banks in the region.

While IIB is headquartered in Moscow, the Russian government holds only a small stake in the bank, so as a legitimate International Financial Institution (IFI) it has been excluded from the financial exemptions imposed on Russia last year by the EU and US.

As the bank is active in Russia supporting SMEs, infrastructure and more recently trade financing, it has been actively raising money in rubles to fund its Russian investments as part of a policy to raise money in the currency of its members to fund projects locally.

IIB placed 10-year bonds of 04 series in the amount of RUB5bn (€70mn) on the Moscow Exchange. This issue was the bank's sixth of the so-called "mibovki" bonds and its largest since the IIB entered the debt capital markets in April 2014. Currently, the total amount of bonds issued by the Bank in Russia, Slovakia and Romania, exceeds €270mn, the bank said in a statement.

"The renewed IIB continues to attract long-term financing in order to expand its investment activities, at the same time contributing to development of the shareholders' capital markets and investing the raised funds in the economies of its member states," the bank said.

The order book was opened on November 17 with an initial coupon rate of 11.8-12.00% p.a. During the book-building the marketed coupon rate was narrowed to 11.9-11.95% p.a. and as a result fixed at 11.9% p.a. The demand for IIB's bonds exceeded RUB8bn. The issue attracted banks, asset management firms and investment companies.

The nominal value of one bond is RUB1,000. The interest will be paid twice a year. There will also be a put option in two years. The issue complies with requirements for inclusion in the CBR's Lombard List. The lead managers of the transaction are Rosbank and Sovcombank.

"Today's successful placement once again serves as a testimony to IIB's well-established reputation of a reliable financial institution," commented Nikolay Kosov, Chairman of the Board of the International Investment Bank. "We very much appreciate the trust of investors, especially in the current unstable economic situation, and we intend to further implement our strategy of borrowing on local debt capital markets, aimed, in the first place, at support of the Bank's member states' economies."

IIB is a multilateral development institution founded based on the intergovernmental Agreement Establishing the International Investment Bank and its Charter. The current nine members of the Bank are Bulgaria, Cuba, Czech Republic, Hungary, Mongolia, Romania, Russia, Slovakia and Vietnam.

The Bank is rated Baa1 (outlook stable) by Moody’s, BBB- (outlook stable) by Fitch and A (outlook stable) by Dagong.

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