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Syndicated Loans: Asian demand for Russian loans

Late last year the fledging market for syndicated loans to Russian banks witnessed its most ambitious and successful deal to date. Tokobank, in its first syndication, raised $85 million at a spread of 4H% over Libor. This was the first loan for a Russian bank at a spread below 5% and more than twice the size of any other such deal.

The market for Russian bank debt has developed rapidly since the first deal, a $20 million extendible revolving credit for Mosbusinessbank arranged by Union Bank of Switzerland in mid-1995. That loan paid 5H% over Libor and was provided by six lenders. Spreads have fallen steadily since then and the latest deal, a $25 million credit for Bank Imperial launched last December, pays only 3M%.

Tenors have lengthened over the same period. The Tokobank deal has a one-year maturity and bankers believe that some of the top credits could raise funds over two years.

Bankers stress that this is a market for brave lenders. Most Russian banks will not divulge detailed information and it is hard to understand the few figures that are released. "We are working in a very difficult environment. It is very much a question of trust," says one banker.

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