Background
In spring 2016 Credit Bank of Moscow (CBOM) was looking to improve its liquidity by tapping the international capital markets. The US$700mn perpetual AT1 issue allowed the lender to boost the regulatory core Tier 1 ratios to 10.5%, exceeding the regulatory minimum levels by 3.3%.
Transaction Breakdown
On April 20 CBOM began a roadshow for the new Perpetual NC5.5 transaction, with 2 teams covering Asia, Europe and the US.
Following healthy feedback from the accounts, CBOM opened the books on April 26 around 7am BST in order to capture Asian demand, and with IPTs set at low 9% area.
As the orderbook grew to over US$1.1bn, guidance was released at 9% area around noon BST.
With US investor demand adding to granularity and volume of the book (over US$2bn), the yield was set at 8.875% for a minimum US$500mn size at 2.30pm BST.
The US$700mn transaction was launched around 4pm BST and subsequently priced in the evening, coming 12.5bp inside the guidance on the back of a US$1.9bn orderbook.
78% of the notes were allocated to asset managers/funds. 10% each went to banks and private banks, and the remaining 2% was distributed among other types of investors.
By geography, the issuance saw fairly even distribution across the globe. The largest portion, 30%, was place with accounts in the UK, 19% was snapped up by US investors, 17% of the notes remained in Russia, 13% went to Europe, 10% to Asia, 9% to Switzerland and another 2% went to other regions.
The transaction marks only the second – and largest - Basel III – compliant AT1 ever issued out of Russia, and is CBM’s first issuance of this kind.
