p>It was reported on June 25 that the MTS phone operator had successfully placed a ruble loan bond issue, which matures in ten years and is intended to raise RUB 10 billion. Returns on the issue are set at 8.7%. According to the issue's managers, the issue was oversubscribed by 1.7x. This is the first ruble bond issue by the company. The company previously placed two dollar-denominated loan bond issues, each worth USD 400 million.
The news that the company has succeeded in raising the required funding amid the liquidity crunch on debt markets (several issuers have defaulted on their debt obligations already and the news from US does not instill optimism) should have a beneficial effect on the operator's investment attractiveness and its financial capacity. We would like to point out that the funds raised are long-term, which is indicative of investors' confidence in MTS.
We retain our target price for the company's stock at USD 18.22 per share, which corresponds to a BUY recommendation.
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