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Belarus returns to the Russian debt market to establish a benchmark for national companies

August 03, 2018 | Cbonds

Belarus is getting ready to place sovereign bonds denominated in Russian rubles on the Russian market; this is reported in the decision of the Council of Ministers of the Republic of Belarus.

As noted by Andrey Belkovets, the head of the Principal Directorate of Public Debt of the Ministry of Finance of the Republic of Belarus, there are several purposes of borrowing: "Speaking of a narrower goal, now we are returning to the Russian market to raise funds for debt refinancing; furthermore, there is a global goal – the formation of a benchmark yield curve, on which Belarusian issuers could rely when borrowing in the Russian market."

Moreover, this placement is also important in terms of diversification of the foreign exchange portfolio, in which the dollar component prevails. Issue of sovereign bonds in Russian rubles will provide the opportunity to streamline the currency structure of the debt portfolio.

As noted by the Ministry of Finance, the infrastructure of the Moscow Stock Exchange is the optimal solution that makes it possible to purchase securities not only for Russian but also for foreign investors (through access to the international clearing systems of Euroclear and Clearstream).

Many well-known Belarusian companies have business both in Belarus and in Russia. They are the potential borrowers in the Russian debt market. For this purpose, the Ministry of Finance of the Republic of Belarus considers it necessary to create a benchmark, which could serve as the landmark for companies when arranging the placement of issues in Russia.

Andrey Belkovets distinguishes the main advantages of placing such a debt by corporate borrowers in comparison with the issue of Eurobonds: the possibility of unhindered communication in Russian; legislation similar to the Belorussian one; lower costs associated with the issuance of bonds; possibility to place issues of smaller volumes compared to the situation where the issue of Eurobonds is arranged; the availability of foreign exchange earnings in Russian rubles for subsequent settlements with Russian creditors.

The parameters of the issues are not disclosed before the meetings with investors. The following companies are appointed as the placement arrangers: Gazprombank, Sovcombank, FC Opening Bank, and the Eurasian Development Bank.

The external public debt of the Republic of Belarus as of July 1st, 2018 reached 16,438.5 million USD, which is 28.6% of GDP.

Company: Belarus

Full company nameMinistry of Finance of the Republic of Belarus
Country of riskBelarus
Country of registrationBelarus

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