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EBRD leads first long term rouble loan syndication
Six banks buy into 7-year Mosenergo loan priced at 275 basis points over MosPrime
The European Bank for Reconstruction and Development has successfully
completed syndication of its 7.2 billion rouble (equivalent to $250 million)
loan for Moscow’s power utility, Mosenergo. The loan will cover half the cost
of refurbishing 17 combined heat and power stations in the capital and the
surrounding region, which are owned by one of Russia’s biggest
electricity-generating companies.
This rouble syndication, which involves six leading international banks in
co-financing the refurbishment of crucial power infrastructure, has set new
parameters in terms of length, price and size. The six have provided a
seven-year loan of over 4 billion roubles at a price of 275 basis points over
MosPrime rate.
The urgency of investments to raise efficiency, replace ageing infrastructure
and cut power losses was underscored by the strain under which the power
system laboured during the exceptionally cold spell in January and February of
2006.
Of the six participating banks, ING Bank (Eurasia) ZAO has taken 1.1 billion
roubles, ZAO Citibank 970 million roubles, ZAO Raiffeisenbank Austria 720
million roubles, BNP Paribas ZAO 570 million roubles, Joint Stock Company
Banque Societe Generale Vostok 420 million roubles and Bank WestLB Vostok
(ZAO) 280 million roubles.
The deal represents the first extension to the Russian domestic lending market
of the A/B loan structure under which the EBRD remains the lender of record
for the full amount. The EBRD is keeping about 3 billion roubles on its own
books under the A loan, which has a 12-year maturity.
It also marks the longest syndicated rouble transaction on the market, as well
as the most high profile loan to date to be linked to the 3-month MosPrime
rate, an index established in April 2005 under the auspices of the National
Currency Association in partnership with major Russian banks such as Sberbank,
VTB and Gazprombank, as well as a handful of foreign banks with a significant
money-market presence. As a credible money-market rate akin to LIBOR in the
international capital markets, MosPrime serves as a transparent benchmark for
the pricing of corporate loans, such as that for Mosenergo.
Andrew Buglass, Director of Structured Finance at ING for Power and Utilities,
said ING believed “long-term, Rouble-denominated debt is a cost-effective way
to finance expansion and rehabilitation, not only in the utility sector, but
more broadly across Russian industry.” “We are delighted to be involved in
this ground-breaking transaction, which we feel will be an important precedent
for future financings,” he added.
Steven Fisher, Managing Director and Emerging Markets Banking Head for
Citigroup in Moscow, said the MosPrime-based loan syndication set a very
positive precedent in the rouble lending market. "The purpose of the loan was
clear and made a lot of sense. Enhanced with an innovative documentation
package and the clearly additional role of the EBRD’s 12-year “A” tranche, we
viewed this deal to be very attractive to a major relationship bank such as
ours," Mr. Fisher added.
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