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VTB issues Novosibirsk bonds

7 September 2012

VTB issues Novosibirsk bonds @ RIAN, Alexander Kryazhev

VTB Bank and VTB Capital issued Novosibirsk municipal bonds on the Moscow Interbank Currency Exchange on September 7, 2012. VTB Bank acted as the issue’s general agent. Prospective investors submitted their bids on the first coupon rate and the securities’ volume to VTB Bank.

The volume of the five-year bond issue totaled 2 billion roubles. The bonds will be redeemed by installments as scheduled. The average coupon rate amounted to 8.42% per year, which is below current lending market rates with the same maturity period. The above issue has the longest maturity (1825 days) in the municipal sector over the last five years. Previously, only major Russian entities issued bonds with similarly long maturity periods.

Coupon payments will not be made until the end of 2012, which also makes this issue special. This arrangement helped cut payments under the city’s public debt servicing programme during the current fiscal period and will significantly ease its debt burden in 2016–2017 when the coupon rate will be under 7%.

Novosibirsk Mayor Vladimir Gorodetsky said: "Today was an important day for us. Novosibirsk returned to the securities market after a long period of absence. This bond issue is the largest in the history of borrowing in Novosibirsk, showing that the demand for our bonds is up. The results of the bond issue show that financial market participants see Novosibirsk as a reliable borrower".

Background information:

Novosibirsk is the capital of the Siberian Federal District. It’s Russia’s largest municipality and the third largest city in terms of population.
Novosibirsk is a business centre with high levels of capital concentration. On April 30, 2012, Standard & Poor’s confirmed its long-term credit rating of BB. Novosibirsk’s national rating is ruAA. The rating outlook is positive.

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