Vneshtorgbank
Ever since the mini-banking crisis of May 2004 exposed the fragility of Russia's privately owned banks, fixed-income investors have started distinguishing more and more between them and the state-owned sector.
While private banks have been limited to maturities of five years, state banks can do 10-year and even possibly 30-year deals. They can also borrow about 150 basis points cheaper than the best private banks.
That gives state banks such as Vneshtorgbank (VTB), Sberbank and Gazprom bank a major competitive advantage – they can expand more rapidly in the profitable area of consumer finance. And that's exactly what they're doing.
Vneshtorgbank (VTB) has been one of the most active Russian borrowers in loan and Eurobond markets.
In Eurobonds, the highlight of its funding year was its 10-year $750 million subordinated bond deal, which it launched in February.
Priced with a coupon of 6.315% at spreads of 260bp over five-year US treasuries, and lead managed by Barclays Capital, Deutsche Bank, HSBC and JP Morgan, the deal was the first Russian subordinated debt deal.
"The deal was a smashing success," says Denis Ursulyak, senior vice-president at VTB.