Rouble convertibility crucial to Moscow’s funding plans
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Rouble convertibility crucial to Moscow’s funding plans

The City of Moscow’s Sergei Pakhomov hopes that full rouble convertibility will offer a way around restrictive legislation that governs municipal issuance in Russia.

Sergei Pakhomov, head of funding for the City of Moscow
Sergei Pakhomov: rare Russian euro issuer

Demand for the City of Moscow’s recent Eurobond was so strong that lead managers Citigroup, Deutsche Bank, Dresdner Kleinwort and JPMorgan were able to revise price talk on the €407 million 10-year issue down from initial price guidance of 105 to 110 basis points over euro mid-swaps down to the final level of 102bp. Sergei Pakhomov, head of funding for the City of Moscow, talks to Euromoney about the issue, and explains what full rouble convertibility will mean for the city’s funding strategy.

What changes have you noticed in your investor base since your last Eurobond?

We have seen certain changes. We saw some absolutely new accounts that had never previously bought our bonds, or any emerging market bonds at all.

Thanks to the various upgrades to our international credit rating in the interim, we now qualify for a new class of investors. These include banks and pension funds, even those banks that will only look at public sector debt above a certain rating. Even though we are BBB+ rated, some houses that usually only buy debt rated A– and above participated in our issue.

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