On February 22, 2007 Alfa-Bank (Ba2/BB) has successfully closed a US$300 million 10-yearnon-call-five subordinated unsecured notes (LT2) transaction. This is the second subordinated debt issue of the Bank to date.
The offering was priced at par with a coupon of 8.635% (+355 bp over mid-swaps or +396 basis points over UST) and 150bp step-up after five years. The issue is rated “Âŕ3” by Moody’s and “Â+” by S&P and matures on February 22, 2017.
The transaction attracted strong institutional investor demand with initial book of around US$620 million and 87 investors participating. The diversified demand came from asset managers (42%), private banks (33%) and banks (25%). In addition, the issue met broad geographic distribution with 20% of the bonds sold to Asia, 30% to the U.K., 11% to Switzerland, 8% to Benelux countries, 8% to Germany, 6% to Scandinavia, 8% to offshore regions and 7% to the rest.
“This transaction represents the first Russian subordinated debt deal in 2007. We are pleased to see excellent results of the new issue and high level of investor demand to this deal, which underlines Alfa-Bank as one of the key players on the market. The offering contributes to increase the bank’s capital ratio and further diversification of Alfa-Bank’s funding sources”, says Andrew Baxter, Chief Financial Officer of Alfa-Bank.
Dresdner Kleinwort and JP Morgan acted as Joint Lead Managers and Joint Bookrunners on the deal.
