Ten of the 12 new bond issues in the Commonwealth of Independent States (CIS) in June were Russian after only one Russian bond issue a month earlier.

Russian companies issued a total of $5.85bn worth of bonds from a total of $7.25bn of bonds issued in the CIS, according to Cbonds, bringing the total value of issues this year to $18.234bn, well ahead of the $6.629bn worth of issues made over the same period last year.

Russian bond markets were very active after a slow month in May with only one issue worth $500mn by Russia’s state-owned transport leasing company GTLK.  

In June, several leading companies came to market to take advantage of falling yields and improving sentiment that analysts say may fade in the second half of this year.

Amongst the biggest issues were Russian privately owned potash fertiliser company EuroChem, which issued a $600mn Eurobond that matures in 2021 at a yield of 3.95%, and leading mobile phone company VimpelCom with two bonds of $600mn and $900mn with yields of 3.95% and 4.95% that mature in 2021 and 2024 respectively.

The Russian government was also in the market with a 10-year $1bn and a 30-year $2bn Eurobond issues with yields of 4.25% and 5.25% respectively.  The bonds were done in defiance of the US government that had the same week announced extending and toughening sanctions, which seem to have no affect on the high investment demand for the paper. Rather than successfully isolating the issue, the two bonds were greeted with the lowest rates in the country’s history. In stressing the sanctions-resistant nature of the sovereign offer, Andrei Solovyov of VTB Capital said foreign investors, “most of whom” were American, bought a “large part” of the issue.

That might be it for Russian government borrowing this year as the finance ministry said earlier this year that it would be issuing $3bn a year for the foreseeable future. However, it also has another $4bn of bonds maturing this year that could be refinanced with fresh issues.

The other major issue in the CIS was by Belarus with a 10-year $600mn Eurobond with a yield of 7.265% and a 5-year $800mn issue yielding 6.875%. Belarus is struggling to cover its obligations this year after $3bn standby programme talks with the International Monetary Fund (IMF) failed last month. The Russia-led Eurasian Fund for Stabilisation and Development (EFSD) released a new $300mn tranche to Belarus at the end of June from a support loan agreed with Minsk in 2016.

Russia has also promised to provide Belarus with a $700mn loan in the next two months to tide it over, but the republic was forced to hit the international capital markets in June to make up the shortfall.

 

Top Russia issues in June 2017
	Currency	Volume (m.)	Lead Managers
EuroChem, 3.95% 5jul2021, USD	USD	500	Citi, Credit Agricole CIB, JP Morgan, Sberbank CIB, Societe Generale, UniCredit
VimpelCom Holdings B.V., 3.95% 16jun2021, USD	USD	600	Barclays, HSBC, ING, JP Morgan
VimpelCom Holdings B.V., 4.95% 16jun2024, USD	USD	900	Barclays, HSBC, ING, JP Morgan
Russia, 4.25% 23jun2027, USD	USD	1000	VTB Capital
Russia, 5.25% 23jun2047, USD	USD	2000	VTB Capital

Source: CBonds

Outside the CIS it was Turkish banks that dominated the bond markets of CEE. Yapi Kredi Bank and Turkiye Is Bankasi both issued $500mn Eurobonds with maturities of 7 years and 11 years respectively at yields of 5.85% and 7%. The government also issued a 8-year $1bn bond with a yield of 3.25%. In total, 13 bonds were issued in CEE worth a total $4.269bn,

All in all, the value of CEE market issues in 2017 is still ahead of the CIS with a total of $33.315bn issues over the first half of this year, ahead of last year’s total of $26.260bn over the same period a year ago.

 

Top issues in June 2017
	Currency	Volume (m.)	Lead Managers
Yapi Kredi Bank, 5.85% 21jun2024, USD	USD	500	Goldman Sachs, JP Morgan, Mizuho, UniCredit and others
Turkiye Is Bankasi, 7% 29jun2028, USD	USD	500	Citi, Mitsubishi UFJ, Standard Chartered Bank and others
TAURON, 2.375% 5jul2027, EUR	EUR	500	JP Morgan, Mitsubishi UFJ, Banco Santander
Globalworth Real Estate Investments, 2.875% 20jun2022, EUR	EUR	550	Deutsche Bank, JP Morgan, UBS
Turkey, 3.25% 14jun2025, EUR	EUR	1000	BNP Paribas, HSBC, UniCredit

Source: CBonds