Alexander Chernyak, deputy general director at Agency for Mortgage Housing Lending (AIZhK)
Photo: Sergey Mikheev
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Russia’s Mortgage Bonds Placed for Foreign Investors
First time in Russia’s history, the country’s mortgage bonds were placed on MICEX yesterday. But the annual yield of 7.12 percent failed to meet expectations both of arrangers and issuer – Agency for Mortgage Housing Lending (AIZhK). With such low yield, the bonds could be of interest mostly to strategic foreign investors, i.e. their liquid market will hardly be established here in the near term.
Russia’s first mortgage bonds were placed on MICEX yesterday. They were released by 100-percent subsidiary of AIZhK – AIZhK First Mortgage Agent. The placement size reached 2.9 billion rubles with the demand exceeding the supply 2.8 fold. The coupon rate was fixed at 6.94 percent on year, which corresponds to the annual redemption yield of 7.12 percent, though the issuer estimated it at 7.25 percent to 7.55 percent a day before.
The issue consists of three tranches, each maturing February 15, 2039. The size of Tranche A amounts to 2.9 billion rubles. Tranche B is worth 264 million rubles and will be bought out by EBRD and AIZhK. AIZhK is also expected to acquire Tranche V of 130.794 million rubles. The issue arranger is Citibank.
As to Tranche A, it was actually targeted at banks and asset management companies. Now, however, these expectations appear too optimistic, as the yield of 7.12 percent will hardly suffice to attract Russia’s players. For most banks, funding is more expensive than the offered yield, while the management of unit funds is generally lured by the yield starting from 8 percent.
www.kommersant.com
All the Article in Russian as of May 24, 2007
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