EBRD launches three-year Rouble Eurobond

By Richard Wallis

The EBRD today launched a 3 billion rouble floating rate Eurobond linked to the 3-month rate for Russia’s RUONIA Overnight Interest Rate Swaps (ROISfix), a benchmark supported by the Central Bank of Russia (CBR).

This is the EBRD’s second such issue this year and is aimed at domestic and international investors to help raise the rouble funding required by the Bank in order to meet its clients’ demand for local currency financing in Russia.

The Bank’s new rouble Eurobond has a three-year maturity and pays a spread of 35 basis points over the 3-month ROISfix rate.

In a pioneering move, the Bank last January issued a 7.5 billion rouble Eurobond, the first ever to be linked to ROISfix. This also had a three-year maturity.

The new issue will settle on 14 November 2013 and is lead managed by Raiffeisen Bank International AG. The bonds will be cleared through Euroclear and Clearstream and listed on the London Stock Exchange, but will qualify for sale and repurchase operations carried out by the Central Bank of Russia (CBR).

ROISfix, launched in April 2011, is an index of fixed interest rates against the CBR’s Rouble Overnight Index Average (RUONIA). It gives market participants the possibility to hedge the interest rate exposure on their liabilities.

RUONIA, the underlying instrument for ROISfix, is based on a significant quantity of actual overnight unsecured transactions reported by 30 participating banks and is calculated on a daily basis by the CBR. Based on actually traded levels, it is structurally less liable to be distorted than indices which reflect indicative prices.

ROISfix is calculated on a daily basis by Russia’s National Foreign Exchange Association (NFEA) and the rate is quoted daily by Russian banks.

The EBRD is both a significant rouble lender and borrower on the Russian market and has taken an active part in developing local capital markets. It traded the first ever rouble Overnight Index Swap after the RUONIA index was launched in September 2010 and concluded the first ROISfix-linked loan for the rouble market in July 2011.

The EBRD has a triple-A rating from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, all with stable outlook.