Банк Москвы

Bank of Moscow: Fixed Income Daily Report

Local Market

Fixed Income Daily Report: 5 years together!

Sberbank''s Rouble bond issue: New OFZ or new RZD?

Primary market

TransNeft eurobond: cards on the table

Corporate News

Renaissance Capital Bank will increase its equity

7 Continent increases its leverage

Fixed Income Statistics

http://www.mmbank.ru/content/files/FI_Statistics.pdf http://www.mmbank.ru/content/files/FI_Statistics.pdf

News Flash

Today

n Bank of Moscow has fully placed its series 01 Rouble bond Issue. The coupon rate was set at 9.25%. The issue size is 10.0 bln. Rouble. The maturity of issue is 3 year with one-year put-option. Earlier, yield guidance was announced at 9-9.5% range./ Bank of Moscow Investment Department

Syndicated loans

n Sberbank is investigating a possibility to attract a syndicated loan worth $1 bln. The deal may be completed in autumn. / Prime-TASS

n Vnesheconombank is looking to secure a $500 million, three-year syndicated loan and is currently in talks with banks./ Reuters

n LC Europlan attracted a syndicated loan worth $75 mln. BNP Paribas, Commerzbank AG and Raiffeisen Zentralbank Osterreich AG acted as arrangers. The loan has a 3-year maturity term, the credit rate accounted for Libor+350bp./ SKRIN

n Bank Vozrozhdenie attracted a syndicated loan worth $50 mln from German DEG and Netherlands FMO. The loan has a 10 year maturity term with an option to redeem the loan after 5 years./ RIA Novosti

Today the following issues begin their circulation on Micex:

n included in A1 quotation list:

Tomskaya oblast bond issue, CB Renaissance Capital-01

n included in A2 quotation list:

CB Petrocommerc-02;

n included in B quotation list::

FC Eurocommerc-05, Glavstroy Finance-02, Vostok-Servis-01.

BM__Toc205367427BM__Toc205367296BM__Toc205367233BM__Toc205367225BM__Toc20536 7011BM__Toc205366920BM__Toc205364437BM__Toc205358032BM__Toc205280725BM__Toc2 05279817BM__Toc205279706BM__Toc205279677BM__Toc205279605BM__Toc205272753Loca l Market

BM__Toc205367428BM__Toc205367297BM__Toc205367234BM__Toc205367226BM__Toc20536 7012BM__Toc205366921BM__Toc205364438Fixed Income Daily Report: 5 years together!

Today we jubilee celebrations dedicated to 5 year aniversary of our FI daily report launch. The start of this product coincided with a boom in russian debt market. We continue provide you with a prompt infirmation and we hope useful analytical support, particulaly today when the market is changing.

During this 5 years we tried to change within the market tendencies, we grew and payed a lot of attention to our products'' quality, rising standards of analysis.

We thank all our subscribers who were willing to read our reports for their time. We appreciate your feedback and recomendations which are taken in account.

In 5 years more than 1100 reports were released and we are not going to stop there.

We have a lot of plans and ideas. We are monitoring the market''s pulse and do not relax a moment. We will continue doing everything to maintain and increase our subscribers base.

Egor Fedorov, Natalia Kovaleva, Anastasia Mikharskaya, Yuri Nefedov, Leonid Ignatiev

BM__Toc205367429BM__Toc205367298BM__Toc205367235BM__Toc205367227BM__Toc20536 7013BM__Toc205366922BM__Toc205364439Sberbank''s Rouble bond issue: New OFZ or new RZD?

One more representative of the 1st tier financial sector issuers announced its borrowing plans. Today the Supervisory Board of Sberbank will investigate the possibility to place 6 bond issues worth 10 bln rub. each. Two of them will have a 5-year maturity term, two - 7.5-year, two - 10 year. Lately RSHB officials said the bank was to attract 50 bln rub. in the domestic market. Yet RSHB was more "modest" - only a part of the funds will be attracted by rouble bonds issuing, another part - in deposits. According to Bella Zlatkis , Sberbank is to issue its bonds "in a year". Please remind, RSHB said about placing its rouble bonds "till the end of the year".

Currently Sberbank has no rouble bonds in circulation, only eurobonds. Despite the fact that RSHB and Sbebank are rated equally the Sberbank`s (-/Baa1/BBB+) yield curve is positioned about 50 bp lower than the RSHB`s (-/Baa1/BBB+) one. VTB (BBB+/Baa1/BBB+) eurobonds yield curve is slightly higher than the RSHB`s one.

After the news about RSHB`s borrowed plans saw the light RSHB`s rouble bonds yield curve moved up to VTB`s curve (before this the domestic bonds picture and the picture in the eurobonds market were almost the same). For example, the cost of 1-year VTB`s or RSHB`s debt accounts for slightly lower than 9% currently (we doubt that Sberbank`s new bonds will have no put option).

Theoretically there are several links to define place Sberbank''s Rouble yield curve. How it will be done - it is a greate question. Who will become Sberbank''s investor - this is another question.

It is clear different "target" investors group can allow several places of Sberbank yield curve at one time. We suppose Sberbank''s Rouble bonds will not be placed without non-residents demand and good yield premium to fair yield curve. Therefore, there is high probability of RZD-08'' placement scenario repetition.

Egor Fedorov, Natalia Kovaleva

BM__Toc205367430BM__Toc205367299BM__Toc205367236BM__Toc205367228BM__Toc20536 7014BM__Toc205366923BM__Toc205364440Primary market

BM__Toc205367431BM__Toc205367300BM__Toc205367237BM__Toc205367229BM__Toc20536 7015BM__Toc205366924TransNeft eurobond: cards on the table

Yesterday, final pricing of new TransNeft eurobonds was announced. Company wants to attract $1.65 bln through the placement of two eurobond tranches:

- 5-year worth $600 mln. with 7.7% coupon (preliminary guidance: 7.625 - 7.875%);

- 10-year worth $1.05 bln with 8.7% coupon (preliminary guidance: 8.625 - 8.875%);

Thus, company stopped in the mid of the preliminary announced coupon range. According to our estimates yield premium to fair yield curve is 49 bps for 5-year issue and 3 bps for 10-year. Using synthetic Gazprom''s yield curves for different currencies, rouble yield equivalent of the new issue can be calculated at 9.0% for both issues. It is highly possible that investors will consider 5-year tranche as more attractive one at a negative market background.

Egor Fedorov

BM__Toc205367432BM__Toc205367301BM__Toc205367238BM__Toc205367230BM__Toc20536 7016BM__Toc205366925BM__Toc205364441BM__Toc205358035BM__Toc205280735Corporat e News

BM__Toc205367433BM__Toc205367302BM__Toc205367239BM__Toc205367231BM__Toc20536 7017BM__Toc205366926BM__Toc205364442Renaissance Capital Bank will increase its equity

Shareholders of Renaissance Capital Bank (RenCap Bank) will increase its capital by almost 1.5 times till June 2009. Cash injection from shareholders is always a positive credit event illustrating the degree of shareholders'' financial force as well as the desire to support the existing business, retail banking in case of RenCap Bank. The strengthening of bank''s capitalization will give the opportunity to develop the business not breaking the prudential norms.

We are quite neutral to ruble RenCap-2 bond (12.43% to put in April 2009) and are forward looking to RenCap-3 placed in June 2008 with 13.75% coupon on secondary trading. Eurobond RenCap CB 2010 (13.65%) looks attractive at current levels. We also recommend RusStandard 2010 (11.55%) and RusStandard 2011 (11.80%) as they are traded with positive spread to HCFB curve while the negative spread would be more logical from credit point of view.

Leonid Ignatiev

BM__Toc205367434BM__Toc205367303BM__Toc205367240BM__Toc205367232BM__Toc20536 7018BM__Toc205366927BM__Toc2053644437 Continent increases its leverage

Reuters newswire reported that the oldest Russian food retailer - 7 Continent - received $150 credit facility from Rosbank by 8.2%. We don''t know the terms of the loan but tend to think it is quite cheap for 7 Continent. More important, we are afraid the Net Debt/EBITDA ratio of 7 Continent will increase from 2.8X (2007) to almost 3.5X (2008) taking into account investment plans of the retailer for 2008 and denial of IPO plans. The only ruble issue of the company to the amount of 7 bln rubles looks obviously overpriced (9.49% to put in almost a year) on back of re-pricing trends on ruble bond market and the absence of credit ratings.

Leonid Ignatiev