March 7, 2018 / 1:53 PM / 14 days ago

UPDATE 3-Russia seeks more Eurobond swaps, planning $3 bln issue in March

(Adds planned Eurobond issue in March)

By Darya Korsunskaya

MOSCOW, March 7 (Reuters) - Russia will seek bids for a swap of Eurobonds in circulation for new debt by March 15, the finance ministry said on Wednesday, and a source familiar with the matter said the ministry also planned a $3 billion Eurobond issue this month.

Moscow started swapping its benchmark “Russia-30” Eurobond last year as part of efforts to bring down its debt-servicing costs, and its borrowing plan envisages it swapping up to $4 billion more of the bond this year for debt with lower coupons.

To replace the Russia-30 Eurobond, on which Moscow pays a 7.5 percent coupon, the finance ministry is considering offering additional issues of Eurobonds maturing in 2027 and 2047 with 4.25 percent and 5.25 percent coupons, respectively.

The ministry also said it did not rule out offering other Eurobonds to replace the Russia-30 issue.

The source familiar with the matter told Reuters the finance ministry was planning to place a $3 billion Eurobond in March.

Demand for Russian Eurobonds may be spurred by S&P Global’s recent credit rating upgrade for Russia ahead of the March 18 presidential election that President Vladimir Putin is set to win easily.

The finance ministry said VTB Capital, which is organising the swap, would collect requests from March 7-15, before a settlement date of March 21. The ministry said the price of the Eurobonds eligible for the swap must not exceed 113.5 percent of their face value.

Russia’s debt to gross domestic product ratio is very low by international standards at around 15 percent, and the finance ministry is not heavily reliant on external borrowing. The ministry is on track to post a budget surplus this year.

Last year Putin ordered that Eurobonds be offered to help Russians holding capital abroad bring their money home. The finance ministry promised to give preference to Russians when selling sovereign Eurobonds.

Wealthy Russians facing the prospect of targeted U.S. sanctions had floated the idea of a special treasury bond to help create favourable conditions for them to bring their cash home. Unlike with bank accounts, future holders of Eurobonds can remain anonymous. (Reporting by Andrey Ostroukh, Darya Korsunskaya and Maria Kiselyova; Writing by Andrey Ostroukh and Jack Stubbs; Editing by Hugh Lawson/Gareth Jones)

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