UPDATE5: Russia places $1.75 bln of 10-yr Eurobonds at 4.75%–min

(Adds data on Alfa-Bank in paragraph 8)

MOSCOW/LONDON, May 25 (PRIME) -- Russia has placed U.S. $1.75 billion of sovereign Eurobonds with a yield of 4.75% annually, which is seen as an acceptable rate in the current circumstances, Finance Minister Anton Siluanov told reporters on Wednesday

“The total bid book amount was about $7 billion. Foreign investors made more than 70% of purchases. This is the group we were targeting at. The amount and quality of bids were good despite attempts to take a possibility to invest in Russian securities from foreign investors,” Siluanov said.

“We are represented on foreign borrowing markets, in general, the yield for our securities corresponds with our expectations,” the minister said, adding that the yield has not grown significantly as compared with the placements several years ago.

The technical placement is scheduled for Friday, the maturity date is May 27, 2026. The issue carries semiannual coupons.

VTB Capital acted as the organizer.

Andrei Solovyov, director of the fixed capital market department of the organizer, said that next time Russia places Eurobonds, a yield may be lower because investors will get accustomed to the unique placement procedures with the use of the National Settlement Depository rather than international depositories.

Siluanov said that Russian banks bought $550 million of sovereign Eurobonds, only private banks participated, while foreign banks acquired $1.2 billion.

Russia’s Alfa-Bank bought an undisclosed amount of Eurobonds during the placement, it said in a statement. “Alfa-Bank takes part in the placement as an investor. It is a promising investment instrument; Alfa-Bank and its clients are very interested to buy sovereign Eurobonds,” it said.

CEO of VTB Bank Andrei Kostin said that investors from the U.S., the U.K., Continental Europe and Asia submitted bids.

Siluanov said that the Finance Ministry will actively use the Russian infrastructure in the future to place Eurobonds. The ministry has no plans to hire foreign banks or settlement centers.

“We have rejected hiring foreign banks for placement of our Eurobonds, and hiring a fiscal agent, this role is usually performed by foreign banks as well. The placement was entirely made with services of domestic financial institutions. I want to tell you that we will continue this practice,” the minister said.

Siluanov also said that international settlement center Euroclear saw an unparalleled pressure from the U.S. He said that this contradicts the free capital flow principles.

Konstantin Vyshkovsky, director of the state debt and financial assets of the state department of the ministry, told Bloomberg that Russia can place $1.25 billion more Eurobonds under its borrowing program in 2016.

He said that Russia did not have a financial necessity to place Eurobonds. The placement was made in order to “confirm the market presence and learn the investors’ moods.”

Deputy Spokesman for the U.S. State Department Mark Toner reiterated on Tuesday that acquisition of Russian bonds poses economic and reputational threats.

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