On May 20, the VTB bank completed the placement of USD 2bn in ten-year Eurobonds. The securities carry a yield of 6.875%. The bonds were placed at the low end of the 6.875-7% yield scale. The bonds are denominated in USD. The securities also carry an early five year redemption option at their nominal value. In all, VTB is seeking to borrow USD 5bn on the international markets in 2008.
The bank placed the bonds at an interest rate on a par with the mature yield of its current long-term bonds, also denominated in USD. The successful placement enables the company to scale up its business financing at current borrowing costs. We are positive about the fact that VTB has managed to borrow such a hefty amount on the international capital markets amid the global liquidity crunch.
We estimate the fair value of one common share in VTB at USD 0.0053, with an upside of 25.3%, which corresponds to BUY recommendation
0.569
0.073
