Capital Market Borrowings

 

Eurobonds and syndicated loans

Eurobonds

Otkritie Bank issued its first Eurobonds in February 2004. Since then, the Bank has regularly raised funding in the international debt capital markets, having made seven senior and four subordinated debt issues. The Bank meets all its obligations for all issues in full and on time.

Over the years, the Bank’s debt issues have been arranged by Citigroup, Commerzbank, JP Morgan Chase, Deutsche Bank, ING, RBI, RBS, Societe Generale, UBS, UniCredit, Gazprombank and VTB Capital.

There are currently five outstanding issues of Otkritie Bank Eurobonds: two senior and three subordinated issues, with total value of USD 1.9 billion.

In April 2012, the Bank issued Reg S/144A USD Lower Tier 2 subordinated Eurobonds. The USD 500 million issue, with a maturity of 7 years, was the largest subordinated Eurobond issue made by a Russian privately-owned bank, and had the longest issue without a call option among Russian issuers at the time. This was the Bank’s first issue of Eurobonds under Reg S/144A, which allowed qualified US institutional investors to participate in the issue. Investors demonstrated strong interest in the issue: approximately 75% of over 120 bids were made by foreign investors.

The next issue of Eurobonds was also subordinated, and was executed in two stages. The first stage was completed in December 2012 without listing the Eurobonds on an exchange. The rate was set at 10% with a maturity of 7 years. In June 2013, the second stage of the issue was completed, with the securities listed on the Irish Stock Exchange. In August 2014, the documentation was amended to reflect the new Basel III requirements.

Another Eurobond issue was completed in late April 2013, a senior USD 500 million issue maturing in 2018. The rate was set at 7.25%.

In June 2013, Khanty-Mansiysk Otkritie Bank (merged into Otkritie FC Bank on 22 August 2016) issued USD 200 million subordinated Eurobonds, maturing in 2023. The rate was set at 9.15%. In August 2015, the documentation was amended to reflect the new Basel III requirements, make the issue perpetual and raise the coupon rate to 10% per annum. As a result of these amendments, the issue was classified as Tier 1 capital.

Taking advantage of favourable conditions following a period of high market volatility, Otkritie Bank successfully issued additional Eurobonds in October 2016: a senior USD 400 million issue, maturing in 2019. Due to high investor demand, the Bank significantly increased the size of the issue, closing the issue at the lower end of the target rate range at 4.5%, which is the lowest coupon rate among the Bank’s issues. This Eurobond issue was one of the few, and the largest, Eurobond issue made in the Russian market in 2016. The issue was important for the entire market as it may serve as a benchmark for other financial sector issuers.

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Issuer Amount Terms Coupon rate Type Issue rating
OFCB Capital Plc.
(Ireland)
$500,000,000 from 25 April 2013
to 25 April 2018
7.25% p.a. payable
semi-annually
Senior LPN issue,
Regulation S/144A
Moody’s: Ba3
OFCB Capital Plc.
(Ireland)
$300,000,000 from 17 December 2012
to 17 December 2019
10% p.a. payable
semi-annually
Subordinated LT2 LPN issue,
Regulation S
Moody’s: B2
OFCB Capital Plc.
(Ireland)
$500,000,000 from 26 April 2012
26 April 2019
10% p.a. payable
semi-annually
Subordinated LT2 LPN issue,
Regulation S/144A
Moody’s: B2
BKM Finance Limited $200,000,000 from 18 June 2013
(perpetual)
10% p.a. payable
semi-annually
Subordinated T1 LPN issue,
Regulation S
Moody’s: B3
Otkritie FC Bank $400,000,000 from 11 October 2016
to 11 November 2019
4.5% p.a. payable
semi-annually
Senior

Syndicated loans

Since 2001, Otkritie Bank has been successfully raising capital in the international debt markets, including through syndicated loans. Over the period, the Bank has raised financing through 18 syndicated loans with total value of over USD 1.9 billion.

In 2001, the Bank took out its first USD 17 million short-term syndicated loan to provide lending to gold mining companies; over time, the Bank raised eight more syndicated loans for the same purpose. These loans were used to refinance loans made by the Bank in the domestic market to provide lending to golf producers and exporters. These loans were well received by the market – the majority were heavily oversubscribed.

In 2006, the Bank took out its first USD 80 million unsecured, syndicated loan to provide lending to trading companies. The syndicated loan was followed by a USD 40 million club deal for Asian investors, and by a USD 60.5 million Schuldscheindarlehen syndicated loan, raised under German law as promissory notes. Continuing the successful trend, the Bank raised its first USD 180 million dual tranche loan in 2007. After the 2008-2009 global financial crisis, Otkritie Bank was one of the first privately-owned banks to raise a syndicated loan in the international market. The new loan was structured as a club deal, and the bids significantly exceeded the offer. This deal was also the first international syndicated loan since 2008 raised by a Russian bank without the support of international financial institutions (e.g. IFC, EBRD). After the Bank’s lending needs were reviewed, it was decided to lend the amount of USD 100 million sought by the Bank. This loan was repaid on time in August 2011.

In September 2011, the Bank again returned to the international lending market and raised a one-year loan to provide lending to gold mining companies, which was also heavily oversubscribed. The deal closed in October 2011 as a USD 200 million (the original amount sought by the Bank) club deal. This loan was repaid in October 2012.

In September 2011, Otkritie FC Bank tapped the international market for another 1-year gold-related loan which was oversubscribed again and closed in October 2011 as a club deal at the initial target amount of USD 200 million. The loan was repaid in October 2012.

In November 2013, the Bank raised a one-year USD 240 million loan to provide lending to gold mining companies, which was also oversubscribed. This loan was also structured as a club deal maturing in 2014, with a possibility of renewal for an additional year. This was the largest deal since the Bank first tapped the syndicated loans market in 2001.

In 2014, amidst political and economic turbulence, Otkritie Bank was the first Russian bank to return to the international syndicated loans market, raising in November 2014 a USD 120 million, one-year syndicated loan from a group of international banks to provide lending to its clients in the gold mining industry. The loan was arranged by Commerzbank, Citibank, Raiffeisen Bank International, JP Morgan Chase Bank, ICBC, ING, Societe Generale Group and AKA. The syndicated loan was repaid on time in 2015.

In December 2015, Otkritie Bank was the only Russian bank to raise a syndicated loan from a group of international investors. This loan was used to provide lending to clients in the gold mining sector. The loan was unsecured, implying that international lenders were willing to take direct credit risk in lending to Otkritie FC Bank. Lenders included UniCredit, AKA, Citibank, Commerzbank, Credit Suisse, Harbin Bank, ING, Oversea-Chinese Banking Corporation Limited, Raiffeisen Bank International and Société Générale Group. The loan was repaid in December 2016.

The successful closure of syndicated loans, especially in the post-crisis years, is a testament to the Bank’s financial stability and reliability, as the strength of the Bank’s relations with its international partners in the financial sector.

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Details on the deals which have been previously closed:

Amount Type Number of lenders Terms
$185,000,000 Unsecured gold-related syndicated
loan facility
11 financial
institutions
December 2015
December 2016
$120,000,000 Unsecured gold-related syndicated
loan facility
9 financial
institutions
November 2014
November 2015
$240,000,000 Unsecured gold-related syndicated
loan facility
15 financial
institutions
November 2013
November 2014
$200,000,000 Unsecured gold-related syndicated
club loan
13 financial
institutions
October 2011
October 2012
$150,000,000 Unsecured trade-related dual-tranche
syndicated facility
22 financial
institutions
September 2007
Tranche A: September 2008
$135,000,000 Unsecured gold-related syndicated
loan facility
24 financial
institutions
May 2008
May 2009
$40,000,000 Schuldscheindarlehen 8 financial
institutions
December 2007
December 2008
$47,000,000 +
€5,000,000
Unsecured syndicated club deal 6 financial
institutions
November 2007
November 2008
$185,000,000
Tranche A: $91,750,000
Tranche B: $93,250,000
Unsecured gold-related dual-tranche
syndicated facility
22 financial
institutions
March 2007
Tranche A: March 2008
Tranche B: September 2008
$60,500,000 Unsecured trade-related syndicated
loan facility
15 financial
institutions
December 2006
December 2007
$80,000,000 Unsecured syndicated club deal 24 financial
institutions
July 2005
Extended: July 2006
Repaid: July 2007
$40,000,000 Secured gold-related syndicated loan
facility
9 financial
institutions
September 2006
September 2007
$150,000,000 Secured gold-related syndicated loan
facility
33 financial
institutions
December 2005
December 2006
$100,000,000 Secured gold-related syndicated loan
facility
18 financial
institutions
December 2004
December 2005
$64,000,000 Secured gold-related syndicated loan
facility
15 financial
institutions
December 2003
December 2004
$47,000,000 Secured gold-related syndicated loan
facility
11 financial
institutions
December 2002
November 2003
$17,000,000 Secured gold-related syndicated loan
facility
6 financial
institutions
December 2001
November 2002