|
|
| Credit Bank of Moscow $500 million lower tier 2 (Basel III compliant) Eurobond | |
| Bookrunners | HSBC, RBS, Raiffeisen Bank International |
| return to the Deals of the Year 2013 index | |
There was no shortage of bond issuance from emerging Europe in the early part of 2013 before tapering fears set in. While deal sizes and volumes hit record levels, however, innovation was thin on the ground.
A notable exception was Credit Bank of Moscow’s $500 million 5.5-year subordinated deal. Designed to be compliant with Russia’s newly implemented Basel III regulatory regime, the tier 2 bond featured loss-absorbency mechanisms linked to the bank’s capital adequacy ratio and to potential bankruptcy prevention measures.
The fact that the first-ever deal in the format in Russia came from a double-B rated private-sector bank instead of one of the country’s big state-owned investment-grade banks surprised and impressed market participants. Sberbank, indeed, did not emerge with a similar deal until nearly a month later.
Credit Bank of Moscow’s deal was also a success in standalone terms, achieving healthy oversubscription and tight pricing. The 8.75% final yield was inside initial price guidance and amounted to a pick-up of just 125 basis points over the bank’s senior debt curve, in line with pricing on more traditional subordinated structures.
More than 130 accounts participated in the deal, with the majority of demand coming from banks and private banks in Europe and Russia. The transaction also attracted substantial interest from farther afield, however, with investors from the UK and US taking nearly 10% of the issue and a further 4% going to accounts in the Middle East and Asia.
