STLC successfully placed a USD 500 million 6-year Eurobond issue

19.04.2019

State Transport Leasing Company (STLC) placed a new 6-year USD 500 million Regulation S Eurobond issue with bullet repayment at par value on the maturity date, 17 April 2025. The coupon rate was set at 5.95 per cent per annum payable semi-annually. The bonds are listed on the stock exchange Euronext Dublin.

The new Eurobond issue generated strong demand from international institutional investors. Almost 70 per cent of the offering was purchased by institutional investors from the UK, Germany, Austria Switzerland and other Continental Europe and represented by real money asset managers, investment funds and private banks. Allocation to Russian investors amounted to 21 per cent of the issue.

J.P.Morgan, Société Générale, Renaissance Capital, Gazprombank, VTB Capital and Sovcombank were mandated to act as the Joint Lead Managers and Bookrunners for the issue. The issuer of the notes is GTLK Europe Capital DAC, an Irish special purpose entity established to provide debt financing for the business operations of STLC Group and a 100 per cent subsidiary of GTLK Europe DAC. The notes are guaranteed by STLC (Ba1/BB-/BB) and GTLK Europe DAC.

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 'Ba2' rating 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 Minister of Transport of the Russian Federation.

STLC remains the only Russian leasing company raising funds through Eurobond issuances. As of today, the total amount of funding attracted by STLC Group in international markets amounts to USD 3.3 billion, including USD 1.5 billion through Eurobond issuances. We were very pleased to see a lot of new investors in the order book during the recent Eurobond placement. We continue our successful activity of further diversification of funding sources and widening of investor base, aimed at attracting of non-state financing for the development of transportation industry of the Russian Federation,” comments STLC’s CEO Sergey Khramagin.

“We are particularly pleased to issue our third unsecured Eurobond in three years. This demonstrates our continued ability to access international capital markets. The fact that the issuance was three times oversubscribed and approximately 80 per cent of the issue was allocated to non-Russian based investors, further demonstrates continued international investor appetite for our company. I believe it also follows our recent success in complimenting our funding strategy with long-term secured financing from US, French and Chinese financial institutions in the past 12 months. As a BB-rated quasi-sovereign entity and in light of the establishment of GTLK Asia Ltd (Hong Kong) and GTLK Middle East FZCO (Dubai) we believe that there is great scope for growth as we deliver a diversified global leasing platform,” added Roman Lyadov, CEO of GTLK Europe DAC.

“We are genuinely glad to continue our strategic partnership with STLC, the largest Russian leasing company, and appreciate an opportunity to act as the Joint Lead Manager of STLC’s Eurobond issue. Broad market coverage by highly professional syndicate teams of Joint Lead Managers and Bookrunners, as well as STLC’s methodical work on the development of long-term relationship with investors led to a synergy allowing to build a high-quality order book and achieve a significant price tightening in the process of bookbuilding,” mentioned Mikhail Avtukhov, Head of CIB and Deputy Head of the Management Board of Sovcombank.

As at the time of placement of a new Eurobond issue STLC Group had two Eurobond issues for the total nominal value of USD 1 billion outstanding. STLC printed its debut Eurobond issue due 2021 at 5.95 per cent per annum in July 2016, followed by a 7-year USD 500 million Eurobond issue with a coupon rate of 5.125 per cent per annum placed in May 2017.

STLC currently holds ‘Ba1’ long-term corporate family rating (outlook ‘stable’) from Moody’s Investors Service, ‘BB’ long-term issuer default rating (outlook ‘positive’) from Fitch Ratings, and ‘BB-’ long-term credit rating (outlook ‘positive’) from S&P Global Ratings.