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Albert May, Citigroup: Russia’s promotion to investment grade should bring high-growth companies to market |
Political risks are rising in Russia, but so too are the rewards. To date, international bond issuance from Russia has been dominated by plain vanilla Eurobonds from leading players in the energy, metals and financial sectors, but bankers at Citigroup believe that this year welcome diversification in both financial instruments and issuers could be seen. According to Albert May, head of corporate finance for central and eastern Europe, the Middle East and Africa at Citigroup in London, the recent promotion of the Russian sovereign to investment-grade status sets the stage for high-growth, high-margin Russian companies with sub-investment grade ratings to access the international debt markets. The most likely candidates are companies involved in technology, telecoms and media, and consumer goods that are looking to borrow to grow their businesses, either through M&A or capex programmes.
Given the relatively high margins of these businesses and the growth opportunities, they are eager to move away from raising equity and are attracted by the relatively long-term financing offered by high-yield bonds.