Final Placement Price for Issue OFZs is 91% of Nominal
OREANDA-NEWS. The order book was closed for the purchase of federal bonds with their nominal value indexed to inflation (OFZ-INs), with a minimum volume of RUB 150 bln. The bonds have an 8-year maturity and semi-annual coupon periods. The issue has a fixed coupon of 2.5% per annum. The nominal value of one bond is 1,000 roubles and will be indexed to inflation daily.
The indicative price range for the placement of the OFZ-INs was initially set at 87-92% of the nominal (effective yield of 4.48-3.68%, respectively). In connection with high demand, the range was narrowed to 90-91% of the nominal. The final price of placement was 91% of the nominal, which equates to an effective yield of 3.84%.
Despite a potential issue size of RUB 150 bln, total demand for the securities significantly exceeded the final size of the deal. Demand came from a diverse range of investors across a broad geography. The issuer decided to accept investor bids to a total of RUB 75 bln.
OFZ-IN, a new financial instrument on the Russian fixed income market, allows inflationary risks to be lowered and offers lower price volatility than ordinary bonds. These securities can serve as a convenient instrument for resident investors such as pension funds, who need to guarantee inflation-beating yield, and for non-resident investors they can help mitigate foreign exchange risks. Investors can choose whether settlements for inflation-indexed OFZs are performed on the stock market or the OTC market.
The technical placement of the bonds is planned for July 17, 2015 on the MICEX Stock Exchange.
The issue was organised by Sberbank CIB, VTB Capital and Gazprombank.
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