STLC extends yield curve by placing a 7-year USD 500 mn Eurobond issue

31.05.2017

State Transport Leasing Company (STLC) has placed a new 7-year USD 500 mn Reg S Eurobond issue with bullet repayment at par value on the maturity date, 31 May 2024. The coupon rate was set at 5.125% per annum payable semi-annually. The bonds will be listed on the Irish Stock Exchange.

Like a year ago, a new Eurobond issue generated strong demand from high-quality international institutional investors. Major part of the offering was purchased by institutional investors from the UK, Continental Europe and Switzerland, represented by real money asset managers, investment funds and private banks. A significant demand was also generated by Russian investor base.

J.P.Morgan and Renaissance Capital were mandated to act as the Joint Global Coordinators and Bookrunners, and Alfa Capital Markets, Gazprombank, Societe Generale and VTB Capital as the Joint Lead Managers and Bookrunners for the issue. The issuer of the notes is GTLK Europe DAC, a 100% operating subsidiary of STLC incorporated in Ireland. The notes are guaranteed by STLC (Ba2/BB-/BB).

The proceeds will be used for the general corporate purposes, including refinancing of existing financial indebtedness denominated in USD.

The issue was assigned 'BB' rating by Fitch Ratings and 'Ba3' by Moody’s Investors Service.

“STLC enjoys absolute state support enacted through the Ministry of Transport of the Russian Federation in implementation of projects of federal importance in the transportation sector. Substantial interest of a wide investor base in a new Eurobond issue of the Company can be considered as recognition of both high efficiency of STLC’s management and investment prospects of the Russian transportation sector in general,” comments Evgeniy Ditrich, the First deputy Minister of Transport of the Russian Federation and the Board member of STLC.

“STLC is currently the only Russian leasing company raising funds through Eurobond issuances. Taking into account a debut Eurobond issue placed last year, we have managed to raise as much as USD 1 billion and continue our successful activity aimed at further diversification of funding sources.  I would also like to mention STLC’s teamwork and continuing support from our shareholder – the Ministry of Transport of the Russian Federation – as key factors making this transaction a success,” comments STLC’s CEO Sergey Khramagin.

STLC placed its debut USD 500 mln Eurobond issue due 2021 at 5.95% per annum in July 2016.

STLC currently holds ‘BB-’ long-term credit ratings from S&P Global Ratings and ‘Ba2’ long-term corporate family rating from Moody’s Investors Service with “stable” outlooks. Prior to Eurobond transaction announcement, on 16 May 2017 Fitch Ratings upgraded STLC’s long-term issuer default ratings in foreign and national currencies by one notch to ‘BB’ with a “stable” outlook.