With six million purchasers and RUB 1trn ($15.8bn) in whole property, Sovcombank is one of Russia’s largest banks, however this has not blunted its ambition 
Author: Barclay Ballard
February 12, 2020
Sovcombank, one of Russia’s largest private-sector lenders, has issued a brand new subordinated Tier 1 bond with a coupon fee of 7.75 p.c. Demand for the bond has been notably sturdy, with an order ebook of $1.9bn permitting the financial institution to tighten the unfold by 75 foundation factors when in comparison with preliminary worth talks. Demand ultimately closed at a powerful $1.4bn.
Proceeds generated from the bond gross sales will probably be used to bolster Sovcombank’s capital reserves and construct its popularity within the public market ahead of a deliberate preliminary public providing (IPO), which is anticipated later this yr. The bond will even improve the financial institution’s capital buffers, serving to it in its efforts to realize recognition as a home systemically essential financial institution.
Demand for the bond has been notably sturdy, with an order ebook of $1.9bn permitting the financial institution to tighten the unfold by 75 foundation factors
The breakdown of bond orders emphasised Sovcombank’s broad enchantment, with 22 p.c of orders allotted to continental Europe, 12 p.c coming from Asia and the Middle East, 12 p.c from the UK and 9 p.c from the US. The remaining 45 p.c got here from Russia.
“We are happy with and grateful for the curiosity in our financial institution from such a large investor neighborhood,” Dmitry Gusev, Chairman of the Management Board at Sovcombank, stated in an announcement. “We attribute this to the financial institution’s popularity, enterprise mannequin and monetary efficiency.”
The IPO roadshow – which passed off between January 24 and January 29 throughout Moscow, Dubai, Zurich, Geneva, London and New York – introduced the financial institution into contact with an enormous quantity of potential buyers, serving to to drive curiosity ahead of its prospective IPO. High-profile monetary establishments, together with JPMorgan Chase, Sberbank, VTB Capital, Gazprombank, Alfa-Bank, Renaissance Capital and Emirates NBD, acted as bookrunners and joint lead managers for the bond issuance.
With six million purchasers and RUB 1trn ($15.8bn) in whole property, Sovcombank is already one of Russia’s largest banks, however this has not blunted its ambition. Late final yr, the financial institution acquired ranking upgrades from the Big Three credit standing companies: Standard & Poor’s, Moody’s and Fitch Ratings. In addition, the financial institution not too long ago expanded its buyer providing by the acquisition of Liberty Insurance for an undisclosed quantity. Collectively, these developments look promising ahead of the financial institution’s upcoming IPO.
