VTBs $1 billion perpetual bond this summer the first in Russia was partly modelled on a similar issue by Banco do Brasil in January, says Herbert Moos, VTBs CFO.
VTBs deal follows Banco do Brasils transaction in permitting amendments once Basle III rules are introduced, something expected to take a few years at least in both Brazil and Russia. And both VTB and Banco do Brasil are state owned.
"Stronger shareholder backing gives investors more peace of mind when buying riskier forms of debt," says Moos. "Ownership by the state can also mean greater bureaucratic hurdles to issuing straight equity."
The deal, which was priced at 9.5%, is expected to raise VTBs tier 1 capital ratio by around 1% to just above 10%.