REUTERS

MOSCOW RUSSIA hit its foreign currency borrowing target for 2012 when it drew strong demand for $7 billion in Eurobonds on Wednesday, in the biggest hard currency denominated issue from an emerging market country since 2000.

Russia was able to sell at the bottom of its previouslyannounced yield guidance, indicating strong demand from investors, who are presently attracted by the country’s strong oil earnings.

“The Eurobond placement could be considered as a real success,” said Nikolai Podguzov, head of fixed income research at VTB Capital.

“The pricing was tightened throughout the course of the placement, and demand was shifted towards longer-term securities, which highlights the reasonably strong confidence of global investors in Russian risk.” A $3 billion 30-year Eurobond was sold at 250 basis points over US Treasuries, $2 billion 10-year paper at plus 240 basis points and $2 billion 5-year Eurobond at 230 basis points over Treasuries, a financial market source said.

On Tuesday, sources told Reuters that the finance ministry planned to issue $3 billion in 30-year paper at 250- 255 basis points over US Treasuries, $2 billion in 10- year paper at 240-245 basis points over Treasuries and $2 billion in the five-year Eurobond at plus 230-235 basis points.

Strong investor appetite is also indicated by the large size of the issue, which means that Russia has been able to meet its entire $7 billion international borrowing target for the year.

The final yield was still generous, in contrast to Russia’s previous dollar Eurobond issue in 2010 that was subsequently criticised for overaggressive pricing, and looked attractive compared with similar emerging market credits, analysts said.