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UPDATE 1-Russia's Promsvyazbank buys back some subordinated Eurobonds maturing in 2019
September 28, 2017 / 1:38 PM / 18 days ago

UPDATE 1-Russia's Promsvyazbank buys back some subordinated Eurobonds maturing in 2019

(Adds PSB’s comment in third paragraph, changes to PSB management in last paragraph; updates prices)

MOSCOW, Sept 28 (Reuters) - Promsvyazbank, Russia’s tenth largest lender by assets, has bought back from the market part of its subordinated Eurobond issue maturing in 2019, it said on Thursday.

Promsvyazbank (PSB) now owns 37 percent of the total volume of the 2019 Eurobonds, worth $105.4 million, the bank said in a statement published on the Irish Stock Exchange.

PSB said in emailed comments it was buying back the bonds to reduce debt servicing costs after it raised $500 million in a new perpetual subordinated debt in July.

PSB, which is controlled by businessmen Alexei and Dmitry Ananyev, did not disclose how much it spent on the buyback.

Some Russian subordinated Eurobonds have come under pressure since the central bank announced a bailout of Otkritie, once Russia’s largest private bank.

Central Bank Deputy Governor Vasily Pozdyshev told Reuters earlier this month that some of Otkritie’s subordinated bonds, whose terms do not require conversion, could be written down if Otkritie’s capital adequacy falls below a certain level.

Earlier this week, Rossium, the investment vehicle that controls Credit Bank of Moscow, among other assets, said it might buy three subordinated Eurobonds issued by Credit Bank, Russia’s No.9 largest lender.

Yields of PSB’s subordinated Eurobond maturing on Nov. 6, 2019, briefly rose to 14.9 percent on Thursday, their highest since March 2015, before falling back to the previous day’s closing level of 13.2 percent. An increase in the yield means the price of the Eurobond has dropped.

The value of the Eurobond has been declining since June amid concerns about the health of Russia’s banking sector. The central bank has rescued two of the country’s largest private banks, Otkritie Bank and B&N Bank, over the past month.

PSB issued the subordinated Eurobond in 2012, raising $400 million. A year later, it added another $200 million to the issue.

In a separate statement on Thursday, PSB said Vladimir Mamakin had stepped down as head of finance as part of the bank’s merger with lender Vozrozhdenie. (Reporting by Kira Zavyalova; Writing by Andrey Ostroukh; Editing by Katya Golubkova and Mark Potter)

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