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Vneshtorgbank - the first among Russian banks to raise a subordinated loan through placing Eurobonds on global market

 
9 February 2005

Vneshtorgbank has raised a subordinated loan worth USD 750 million. It`s the first time in the history of the Russian banking system that a subordinated loan has been financed through placing 10-year (with a call option) fixed coupon Eurobonds. Joint lead managers of the placement were Barclays Capital, Deutsche Bank, HSBC and JP Morgan.

The issue was well welcome by the global investment community resulting in applications worth USD 1.2 billion. All in all, 116 investors participated in the placement, with a major part of the issue being acquired by European investors,ong them 49% by Great Britain and 27% by other European states; besides, 8% were bought by investors from the Asian region. Semi-annual coupon was set at 6,315% p.a., compatible with the yield of 222 bps over 5-year midswap rate.

Leading international rating agencies Standard & Poor`s and Fitch Ratings assigned BB- and BB+ ratings, correspondingly, to the issue. Moody`s Investors Service has awarded an investment grade rating of Baa2, which is at the same rating level as the senior uncollateralized debt commitments of Vneshtorgbank are.

The Subordinated Loan Participation Notes issued by VTB Capital SA (the SPV), were used to fund a subordinated loan to Vneshtorgbank which would enable the Bank to further strengthen its capital base. Once the Bank of Russia approves the issue, the subordinated loan will be included in Vneshtorgbank`s additional capital.

Now that the first public offering of a subordinated loan by a Russian bank has proved a success, there is every reason to expect the national banking system to further increase its capitalization, enhance its stability and win the confidence of both households and global banking community.

Not to be distributed in the USA.

The present communication shall not be considered as an offering of any Vneshtorgbank securities in the USA. No securities placed or to be placed by Vneshtorgbank JSC cannot be either offered or sold in the USA without registration or being exempt from registration under the USA Securities Act of 1933 (asended or supplemented). Vneshtorgbank JSC does not intend to register any part of this issue in the USA or to make initial public offering of these Notes in the USA.

The present communication is made to and directed at (а) persons residing outside Great Britain, or (b) investment professionals engaged in investment activity falling under Section 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (hereinafter referred to as the Order), or (c) high net worth legal entities and other persons to whom it may lawfully be communicated falling under Section 49(1) of the Order (all such persons together referred to as relevant persons). Any securities mentioned in the present press release can only be purchased by the relevant persons, and any invitations, offers and agreements relating to these securities subscription can only be made to or with the relevant persons. This communication or any information it contains must not be acted on or relied on by persons who are not relevant persons.

Stabilization/FSA.

This press release is not a public offer or a promotion of any securities in the Russian Federation. Nor is it an offer to buy any securities in the Russian Federation, nor an invitation to submit offers to buy any securities in the Russian Federation.


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