ZENIT Bank offers its clients a wide range of debt instruments denominated in foreign currency. High volatility, attractive current yields on most of such instruments and a lack of currency risk make it possible to use such instruments for both arbitrage opportunities and investment activity. The specialists of our Bank are available to provide consultations on various types of securities (Government and corporate Eurobonds, OVGVZ (Brady Bonds), etc), and will provide information support on the evolving situation in all world markets. Global analytical support on any asset allows our partners to make the right decisions in the choice of the investment instrument.
The name of our Bank, which has been accepted as an equal partner by the leading financial institutions worldwide, makes it possible for us to arrange the best pricing. ZENIT Bank pays particular attention to arranging structured transactions. The Bank's specialists will be ready to make structured transactions which best meet your interests, and engage in transactions whose terms are different from the standard market terms to satisfy the requirements of our counterparts.
OVGVZ
The state domestic currency loan bonds (OVGVZ) represent internal debt of the Russian Federation. They have a lower rating than the Russian Eurobonds, but offer higher yields due to their nature, fewer players, and lower liquidity.
| Issuer |
Volume (mln) |
Currency |
Maturity |
Coupon |
| % |
period |
| OVGVZ-4 |
3,462 |
USD |
May 14, 03 |
3 |
A |
| OVGVZ-5 |
2,837 |
USD |
May 14, 08 |
3 |
A |
| нбцбг-6 |
1,750 |
USD |
May 14, 06 |
3 |
A |
| OVGVZ-7 |
1,750 |
USD |
May 14, 11 |
3 |
A |
| OVGVZ-8 |
1,322 |
USD |
May 14, 07 |
3 |
A |
|
Eurobonds
Of the whole range of debt instruments, Eurobonds are the most attractive for investment and offer both current coupon payments of interest, whose annual rate varies from 5% to 12.75% depending on the issue, and capital gain opportunities. The secondary Eurobond market is one of the most active segments of the debt instrument market whose liquidity is maintained by a large number of Russian and foreign investors. Short-maturity instruments are the most attractive investment vehicles, while the 30-year bond offers the best arbitrage opportunities. In addition to Eurobonds denominated in US dollars, the Ministry of Finance of the Russian Federation has also issued bonds denominated in Italian liras and Deutsche marks.
| Issuer |
Volume (mln) |
Currency |
Maturity |
Coupon |
| % |
period |
| Russia 9% 03 ITL |
750,000 |
ITL |
Apr 03, 03 |
9,000 |
A/2 |
| Russia 03 |
1,250 |
USD |
Jun 10, 03 |
11,75 |
A/2 |
| Russia 9% 04 |
2,000 |
DEM |
Mar 25, 04 |
9,000 |
A/2 |
| Russia 9 3/8% 05 |
1,250 |
DEM |
Mar 31, 05 |
9,375 |
A/2 |
| Russia 05 |
2,969 |
USD |
Jul 24, 05 |
8,75 |
A/2 |
| Russia 07 |
2,400 |
USD |
Jun 26, 07 |
10 |
A/2 |
| Russia 10 |
2,534 |
USD |
Mar 31, 10 |
8,25 |
A/2 |
| Russia 18 |
3,467 |
USD |
Jul 24, 18 |
11 |
A/2 |
| Russia 28 |
2,500 |
USD |
Jun 26, 28 |
12,75 |
A/2 |
| Russia 30 |
18,400 |
USD |
Mar 31, 30 |
5 |
A/2 |
|
Municipal and Corporate Eurobonds
The following bonds are the most liquid securities in this sector of the market:
- Mobile TeleSystems — USD denominated bonds with a 10.95% semiannual coupon and maturity in 2004.
- Saint Petersburg USD — USD denominated bonds with a 9.5% semiannual coupon and maturity in 2002.
- Nizhni Novgorod — USD denominated bonds with a 8.75% semiannual coupon and maturity in 2005.
- Mosenergo — USD denominated bonds with a 8.375% semiannual coupon and maturity in 2002.
- Tatneft — USD denominated bonds with a 9.00% semiannual coupon and maturity in 2002.
Despite the fact that these are small issue bonds with low liquidity, they are attractive investment instruments because they have lower risk than the general market risk.
| Issuer |
Volume (mln) |
Currency |
Maturity |
Coupon |
| % |
period |
| Rosneft |
150 |
USD |
20.11.2006 |
12,75 |
A/2 |
| Sibneft |
400 |
USD |
13.02.2007 |
11,75 |
A/2 |
| MMK |
100 |
USD |
18.02.2005 |
10 |
A |
| Gazprombank |
200 |
USD |
22.12.2003 |
9,75 |
A |
| Mobile TeleSystems |
250 |
USD |
21.12.2004 |
10,95 |
A/2 |
| Saint Petersburg |
300 |
USD |
18.06.2002 |
9,500 |
A/2 |
| Nizhni Novgorod |
100 |
USD |
03.10.2005 |
8,750 |
A/2 |
| Tatneft |
300 |
USD |
29.10.2002 |
9,000 |
A/2 |
| LUKoil-3 |
350 |
USD |
03.11.2003 |
1,000 |
A |
| Mosenergo |
200 |
USD |
09.10.2002 |
8,375 |
A |
|
In December 2001, ZENIT Bank co-managed with SalomonSmithBarney and Commerzbank a Eurobond issue for OAO Mobile TeleSystems. ING Barings Х Dresdner Bank were co-lead managers for the issue. That event was an important threshold in the development of the investment business of our Bank. We guarantee our clients high liquidity of this bond.
Emerging Markets Bonds
There are many different types of bonds in the world. The bonds issued by governments or corporations in developed markets are usually low-yield instruments, which, in our view, are good as a means of diversifying investment risks.
There are also bonds issued by governments or corporations in emerging markets denominated both in local and convertible currencies. The convertible currency bonds (usually in USD, DEM, ITL, JPY) are issued in the form of Eurobonds or exist in the form of Bady Bonds (the debt of emerging markets, especially in Latin America, restructured in the early 1990s). These are highly volatile bonds with high yields, which represent a risky asset due to political and economic instability typical of the countries in such markets. These may be attractive as speculative instruments.
Konstantin Pospelov, tel. 933 07 30, E-mail: pospelov@zenit.ru |
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