European and US investors showed high demand for Eurobonds of Belarus’s Eurotorg


"MOSCOW – Dollar borrowings of Belarusian issuers used to be represented only by sovereign Eurobonds, but now a corporate issue has joined them. Eurotorg, one of the largest retail chains in Belarus, placed USD 350 million worth of five-year securities in an offering that was more than 5-times oversubscribed. European and US investors showed the greatest interest, according to Dmitry Gladkov, Managing Director of Renaissance Capital, who was involved in arranging the transaction.

“The volume of the transaction was determined by the needs of the company. Primarily it is for refinancing the current debt portfolio and lengthening the maturity of the debt. The volume of demand was extremely high: the order book approached USD 2 billion and included bids from 240 investors,” said Gladkov.

Eurotorg will place five-year loan participation notes for USD 350 million with a yield of 8.75 percent per annum; the volume of investor demand was about USD 1.9 billion. The issue was initially marketed at a yield of about 9.5 percent per annum. The placement was a Reg S transaction.

The transaction was organized by J.P.Morgan, Sberbank CIB and Renaissance Capital.

“A very high volume of demand came from the US, Europe, Asia, Middle East and even South America. From the point of view of geographical diversification and investor interest, it was an exemplary issuance. We also saw many bids from high-quality institutional international global investors, who showed a high level of interest and took part in the deal. Russian demand was also very significant, but I think that the US and Europe will be the leaders in terms of demand,” the investment banker added.

The company's ratings are “B-“ (S&P) and “B-“ (Fitch); the issue is expected to have ratings at the same level.

“Broad demand was primarily due to market interest in new high-quality stories. Before yesterday only sovereign issues represented Belarus on the market. This is the first and only issue; there are no other borrowers, including quasi-sovereigns. So essentially a new market has been opened. Here everything came together – the market's interest in new stories, impressions of the management and most importantly the business, market positions and credit quality of the company,” Gladkov said.

He noted that the demand for EM debt remains quite high: in his opinion, the list includes Ukraine, Belarus, Kazakhstan, and Russia.

“Over the past week, we have placed issues from very different jurisdictions – Eurotorg and Nigeria’s Fidelity Bank – and both of them have been very successful,” Gladkov said.

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