Russia's State Transport Leasing Company places $0.5bn bond

By bne IntelliNews July 13, 2016

Russia's State Transport Leasing Company (STLC) on July 12 closed the book for its debut five-year, $500mn Eurobond issue. The placement is a rare occurrence by a state-controlled company amid restrictions on foreign borrowings imposed by Western sanctions against Russia.

However, unlike the recent sovereign Eurobond placement by the Finance Ministry in Moscow, which ended up being mostly domestically bought, the issue by STLC managed to attract considerable foreign interest, possibly indicating a slow turnaround in sanctions-induced caution.

"According to the lead managers, most of the issue was purchased by investors in continental Europe and the UK," Sberbank CIB writes, stressing that local investors were not the key participants in the placement.

"Thus, we can gather that the success of the placement had much to do with the continued high risk appetite among international investors, which is not currently offset by a sufficient supply of Russian corporate paper," the analysts suggest.

Reportedly the issue that placed at a yield of 5.95% oversubscribed almost five-fold, with the guidance yield cut twice by a total of 55bp during the placement due to high demand.

The expected inclusion of the bond in the EMBIG index also contributed to the success of the issue, Sberbank believes. At the same time, the bank sees no upside for the bond's price at the placement yield given the borrower's credit characteristics.

STLC provides leasing services in transport industry. Since 2009, the company has been developing special leasing programmes under a governmental project to modernise road and communal infrastructure and transportation systems of towns and regions.

STLC operates in all Russian regions and is 100% controlled and governed by the Transport Ministry.

Related Articles

Nuclear deal exit latest: Swiss bank, Indian lenders, Russia’s Lukoil, Czech industry minister and Booking.com drop out

A Swiss bank on May 29 suspended new transactions with Iran and said it was winding down Iran-related activities while two Indian banks reportedly asked exporters to complete their financial ... more

Gazprom enforces $476mn claim against Moldova for gas used in rebel Transnistria region

Gazprom has enforced another claim against Moldova’s natural gas transport operator Moldovagaz, worth $476mn, in the International Court for International Arbitrage of the Industry and Trade ... more

EEU, Iran sign interim free trade agreement in Astana

The Moscow-led Eurasian Economic Union (EEU) and Iran have signed an interim free trade agreement (FTA), TASS reported on May 17. “The provisional agreement includes an initial list of goods, ... more

Dismiss