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UPDATE 1-Russia preparing to issue 7-yr Eurobonds in euros, source says

Updated: 27-11-2018 14:51 IST
Russia is ready to tap the global debt market by selling a seven-year Eurobond denominated in euros in December, a financial market source said on Tuesday.

Russia, under Western economic and financial sanctions, is preparing to issue the Eurobond days after the latest escalation of its conflict with Ukraine, as Moscow strives to reduce dependence on the U.S. dollar.

The Eurobond settlement date is scheduled for Dec. 4, 2018, the bond's maturity date is Dec. 4, 2025, the financial market source said. The Eurobond will carry a yield of around 3 percent, according to the source.

The exact size of the issue was unclear; the source described it as "benchmark." VTB Capital is the sole bookrunner of the issue.

Russia has chosen the European currency to issue its Eurobond amid uncertainty about whether Washington will impose sanctions on holdings of Russian state debt.

Even though the market was pricing such sanctions risks, especially penalties on holdings of new Russian debt, foreigners still own a large chunk of Russian bonds. The share of Eurobonds held by foreigners stood at 46.3 percent as of Oct. 1.

The Russian finance ministry, which has no real urge to borrow on the global market thanks to a budget surplus amid higher-than-expected oil prices, has sent mixed signals about its Eurobond plans.

In September, Finance Minister Anton Siluanov said market volatility was too great to tap the Eurobond market. Weeks earlier, the ministry had not ruled out a euro-denominated Eurobond but said a dollar-denominated Eurobond was more likely. (Reporting by Anton Kolodyazhnyy and Andrey Ostroukh; editing by Larry King)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)