(Changes source to finance ministry, adds detail, organiser’s comment)
MOSCOW, March 21 (Reuters) - Russia raised $3 billion in a new dollar-denominated Eurobond and 750 million euros in a top-up issue of an existing euro-denominated Eurobond, the finance ministry said on Thursday, tapping the global bond market for first time this year.
Russia capitalised on favourable market conditions and a globally increased investor appetite for risky assets amid somewhat lower concerns about new U.S. sanctions that could possibly target Russian state debt.
The Eurobond placement comes after Moody’s Investor Service upgraded Russia’s sovereign rating last month, so that it is now rated investment grade by all three big international rating agencies.
Russia sold dollar-denominated Eurobonds maturing in 2035 with a yield of 5.1 percent, while setting a yield for euro-denominated papers maturing in 2025 at 2.375 percent , the finance ministry said.
Demand for the dollar bond had reached more than $7 billion, while bids for the euro issue exceeded 3 billion euros, a financial market source said on Thursday.
The dollar Eurobond became the largest issue for the finance ministry since 2013, said Andrey Solovyov, Global Head of Debt Capital Markets at VTB Capital, one of the bond placement organisers.
Investors from Britain bought 55 percent of the dollar-denominated issue, while 21 percent was bought by U.S. investors, 8 percent by Europeans and 11 percent by Russian investors, Solovyov said.
Among buyers of the euro-denominated Eurobond, British investors accounted for 40 percent, European investors bought 18 percent, U.S. investors - 17 percent. Russian investors bought 18 percent of the issue, Solovyov said.
Facing strong demand, Russia lowered its yield guidance during the day from around 5.5 percent and 2.625 percent set initially.
Alfa Bank said Moscow’s decision to tap the Eurobond market reflected a “burgeoning appetite for riskier assets (which) eclipses the continued threat of U.S. sanctions”.
Global demand for emerging market assets picked up after the U.S. Federal Reserve adopted a dovish tone after its policy meeting on Wednesday.
The finance ministry had selected lenders VTB Capital, a unit of VTB, and Gazprombank to organise its 2019 Eurobond issuance.
In November last year Russia raised 1 billion euros ($1.14 billion) via its first euro-denominated Eurobond sale in five years, paying a yield of 3.0 percent.
Russia’s central bank said this month that foreigners had increased their holdings of Russian Eurobonds in February, as well as in OFZ treasury bonds. Demand for these bonds serves as a gauge of market sentiment toward Russian assets. ($1 = 0.8770 euros) (Reporting by Tatiana Voronova, Andrey Kuzmin, Oksana Kobzeva, Andrey Ostroukh and Darya Korsunskaya Writing by Andrey Ostroukh and Gabrielle Tétrault-Farber; Editing by Catherine Evans and Frances Kerry)
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