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| Russian Railways | |
| Value | £350 million 20-year bond, £300 million tap |
| Bookrunners | Barclays Capital, Goldman Sachs, VTB Capital |
| return to the Emerging Europe Deals of the Year index | |
Other notable CEE bond deals were few and far between last year, even before global conditions and an ill-timed $1 billion international debut from Serbia slammed markets shut in mid-September. Russian iron-ore producer Metalloinvest deserves a mention for a solid inaugural $750 million five-year transaction that attracted four times oversubscription against a difficult market backdrop in July, but the final place in the 2011 winners list goes to Russian Railways for reopening the sterling market to CEE investors with an unprecedented 20-year deal.
The quasi-sovereign borrower had already made a name for itself in the global bond markets with a heavily oversubscribed $1.5 billion debut in March 2010 but the choice of both currency and maturity was nevertheless a bold one, given the notoriously conservative nature of UK institutional investors and the fact that the only previous Russian forays into the market – by Gazprom and VTB – had been for much shorter-dated paper.
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Pavel Ilichev, Russian Railways |
“It was quite a risky move from our side to present such a long-term deal after a four-year gap since the last issue from a Russian credit,” says Pavel Ilichev, deputy head of corporate finance at Russian Railways. “But we decided that with ultra-low interest rates and good liquidity as it was at the beginning of the year, it was a good opportunity to issue extra-long-term bonds to fit our capital needs.” The deal also highlighted once again the importance of flexibility in volatile markets. At the launch date in March, with political turmoil in the MENA region jangling nerves, some buyers were still struggling to get comfortable with Russian risk, so the issuer opted to lower its £500 million ($785 million) target to ensure tight pricing – and was amply rewarded when investors came back for a further £300 million in June.
“We owe this success to our conservative financing policy, unique story with quasi-sovereign status and a good business model,” says Ilichev. “This deal has showed that Russian borrowers can attract long-term funding on international markets, which is particularly important in the context of infrastructure projects and related financing.”
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Emerging Europe |
| Polkomtel/Zygmunt Solorz-Zak |
| Global Ports |
| Vimpelcom |
| Russian Railways |
| Return to the Deals of the Year main index |
