Russian banks should follow Turks into MTNs

Russian banks would do well to follow the example the Turkish banks set this year in the MTN market.

  • By Francesca Young
  • 17 Dec 2013
Email a colleague
Request a PDF

The pressures faced by Russian financial institutions are similar to those by their Turkish counterparts. Under Basel III many of them will need to issue subordinated bonds in 2014 to maintain their capital ratios as well as senior debt. That will put their investor bases under pressure as they are asked to participate in a variety of instruments.

Most Russian bank borrowers already use MTN programmes for their benchmark funding, so already have the documentation in place required to tap this market.  As well as VTB — which was the exceptional early adopter of this market and has been printing small reverse enquiry-led notes for years — Sberbank, Russian Standard Bank, Petrocommerce Bank and Ak Bars Bank are among the Russian issuers that already have MTN programmes in place.  

There is certainly appetite for Russian MTNs. The country carries investment grade ratings of Baa1/BBB/BBB, which is one of the main requirements MTN investors have when considering new issuers. Bankers say that MTN investors in Asia, Europe and the US are increasingly including Russia on their lists of countries they want to invest in, lured into the emerging markets by the high yields on offer. 

And there should be a willingness on the issuers' side too. Regular users of the MTN market typically benefit from those deals being priced inside benchmark curves, which should prove alluring. Any half decent CEEMEA banker is more than aware of how price sensitive Russian borrowers can be.

Perhaps even more importantly, many predict that 2014 will be a year of high volatility in emerging market credit if — or rather when — the US Federal Reserve begins its  tapering of quantitative easing. 

The Turks made especially good use of the MTN market during the summer when yields rose in traumatic fashion. Although benchmark issuance hit a roadblock, the banks carried on printing private placements in a variety of different currencies. Around $2bn was placed in MTNs from Turkish banks this year.

Preaching the need for funding diversity should be easy work for bankers next year. And it seems most big Russian banks are already well aware of the need for it, having tapped Swiss franc and Asian markets in 2013. 

MTNs are another step in the right direction but they are well known to be hard work. Printing regularly in this market requires flexibility and responsiveness for a number of small transactions that only over time come to form a substantial funding base. But now that Russians are welcome in this market and are well equipped to use it, they should grab the opportunity.

  • By Francesca Young
  • 17 Dec 2013

Bookrunners of Global Covered Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 16 May 2017
1 HSBC 5,680.75 25 5.91%
2 Commerzbank Group 5,001.67 29 5.20%
3 UniCredit 4,986.06 37 5.19%
4 Credit Agricole CIB 4,573.35 20 4.76%
5 BNP Paribas 4,463.32 18 4.64%

Bookrunners of Global FIG

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 22 May 2017
1 Morgan Stanley 139,173.11 554 6.60%
2 JPMorgan 135,505.56 612 6.43%
3 Citi 127,910.15 757 6.07%
4 Goldman Sachs 125,520.43 675 5.95%
5 Bank of America Merrill Lynch 119,876.60 536 5.69%

Bookrunners of Dollar Denominated FIG

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 25 Apr 2017
1 JPMorgan 104,210.95 417 10.23%
2 Citi 99,111.89 557 9.73%
3 Bank of America Merrill Lynch 94,929.57 429 9.32%
4 Morgan Stanley 89,025.14 390 8.74%
5 Goldman Sachs 85,770.72 496 8.42%

Bookrunners of Euro Denominated Covered Bond Above €500m

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 09 May 2017
1 SG Corporate & Investment Banking 3,864.50 15 8.19%
2 LBBW 3,506.91 13 7.43%
3 Credit Agricole CIB 3,308.89 13 7.01%
4 BNP Paribas 2,845.56 10 6.03%
5 Commerzbank Group 2,832.12 11 6.00%

Global FIG Revenue

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 02 May 2016
1 Morgan Stanley 365.83 497 7.62%
2 JPMorgan 332.66 618 6.92%
3 Bank of America Merrill Lynch 299.89 590 6.24%
4 Goldman Sachs 276.71 375 5.76%
5 Citi 264.54 592 5.51%

Bookrunners of European Subordinated FIG

Rank Lead Manager Amount €m No of issues Share %
  • Last updated
  • 23 May 2017
1 HSBC 5,378.40 21 6.13%
2 Barclays 4,839.18 14 5.52%
3 Credit Suisse 3,558.82 15 4.06%
4 BNP Paribas 3,205.75 15 3.65%
5 Goldman Sachs 2,788.75 18 3.18%