Sovcombank issues subordinated Tier 1 bond with a coupon of 7.75% for an amount of USD 300 m

A very strong granular orderbook of USD 1.9 bn allowed to tighten the spread by 75 bps from the initial price talks. The demand peaked at USD 1.9 bn, with the book closing at USD 1.4 bn. Sovcombank’s 7.75% coupon rate is the one of the lowest for a USD subordinated Eurobond issue ever offered by Tier 1 Russian banks.

Following the approval from the Bank of Russia, the proceeds will be used to increase the bank's additional capital. The transaction will help Sovcombank optimize its capital structure, build public market track record before bank’s IPO and increase capital buffers for a potential recognition of the bank as D-SIB.

The orderbook had 181 orders and the eventual allocation by region was as follows:

  • Russia: 45%
  • Continental Europe: 22%
  • Asia and Middle East: 12%
  • UK: 12%
  • US: 9%.

This breakdown reflects the bank’s and the organisers’ initial plan to achieve maximum liquidity.

“We are pleased with and grateful for the interest to our bank from such a wide investor community. We attribute this to the bank’s reputation, business model and financial performance,” said Dmitry Gusev, Chairman of the Management Board.

The roadshow took place in Moscow, Dubai, Zürich, Geneva, London and New York between 24 and 29 January. JP Morgan, Sberbank, VTB Capital, Gazprombank, Alfa-Bank, Renaissance Capital, and Emirates National Bank of Dubai managed the placement as bookrunners and joint lead managers.

Publication date: 3 February 2020