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Комментарий Андрея Соловьева, Руководителя Управления рынков долгового капитала ВТБ Капитал, для International Financing Review

16 Июля 2011

Ferrous result

IFR 1892 16 July to 22 July 2011

Not many borrowers in emerging markers can show off with intraday execution, especially at a time of heightened uncertainty. A 12-hour pricing is even rarer for a first-time issuer, especially for a Double B rated credit – but Russian iron ore producer Metalloinvest achieved just that last week.

Some seasoned issuers from the Triple B to Double A space took a step back while Uzbek-born billionaire Alisher Usmanov’s mining company was pressing ahead with its inaugural trade, immediately after completing investor meetings.

Besides astonishing the market and leaving a long-lasting impression, Metalloinvest took advantage of the relative calmness of last Thursday following a decent Italian auction outcome that resulted in cash prices gaining ground.

The Ba3/NR/BB– rated firm priced a US$750m five-year Reg S/144a bond at the tighter end of talk. Leads Bank of America Merrill Lynch, BNP Paribas, Credit Suisse, ING, JP Morgan, RBS, SG CIB, Troika Dialog and VTB Capital released guidance of the mid to high 6% area before narrowing it to 6.625% on strong demand from around 265 global accounts.

“For a debut issuer to be able to successfully launch an intraday transaction in the current market conditions at the tight end of guidance is a phenomenal result and speaks volumes about the Metalloinvest credit and the management team’s ability to capture the attention of the global investor base,” said Joshua Presley, fixed income syndicate vice president at Credit Suisse.

Raw materials and commodity names, especially from the former Soviet Union, have enjoyed a good reception from investors this year and the shortage of such supply made the deal even more eye-catching.

“Investors were keen to gain exposure to a new name in the sector, resulting in a decent-sized order book, which allowed us to tighten the yield,” said Andrey Solovyev, head of DCM at VTB Capital.

Pricing was far more important for Metalloinvest than size and a syndication official away from the transaction described it as being the “right level, right size and from an attractive sector”.

Another advantage for Metalloinvest is the much stronger position of its iron ore segment compared with other metals companies. A third of the firm’s income comes from mining, and heightened commodity prices is another plus-point.

It was little wonder that the maiden Metalloinvest bonds were more than four times covered. The largest portion found a home with investors in the UK, at 38%, followed by accounts in the US, who took 27%. Domestic investors bought 22% and around 7% of the paper found its way into Swiss hands.

By investor type, almost two thirds (65%) of the bonds were allocated to asset managers and funds, while banks took 33%.

The success of the EEMEA region’s only deal of the week certainly offers hope to others, demonstrating that the market is not in a completely risk-off mode for good-quality names.

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