MOSCOW: Russia tapped the global debt market on Thursday for the first time this year by opening the books on two sovereign euro-denominated Eurobonds in a bid to secure additional funding, two financial market sources said.
Moscow has been seeking additional sources of funding to make up for a budget shortfall caused by lower oil prices and the coronavirus pandemic. Russia plans to increase its public debt to nearly 19% of gross domestic product this year.
The country is placing a seven-year euro-denominated Eurobond, setting its yield guidance at around 1.125%, the sources said. The guidance had initially been set at 1.25%.
Russia’s second tranche, a 12-year Eurobond also denominated in euros, has a revised yield guidance of 1.875% after sources initially said it would be around 2%.
Demand for the Eurobonds exceeded 2.2 billion euros, one of the sources said, with the main interest coming from domestic investors.
Russia last tapped the global debt market in 2019, when it made two Eurobond placements in which it raised $5.5 billion and another 750 million euros.
Its previous plans to raise $3 billion in Eurobonds this year were thwarted by the COVID-19 pandemic and by increased risks of Western sanctions, prompting Moscow to focus on borrowing at home instead.
The finance ministry said on Tuesday it had picked VTB Capital, Gazprombank and Sberbank CIB as organisers of a sovereign Eurobond issue this year.
VTB Capital, which has acted as sole lead manager for Russian Eurobonds in the past, had said that making a Eurobond placement in November seemed more attractive than doing so in December.
(Additional reporting by Anton Kolodyazhnyy; writing by Alexander Marrow and Gabrielle Tétrault-Farber; editing by Katya Golubkova, Larry King)
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