RBC DAILY. Tinkoff Credit Systems Bank has redeemed two thirds of BO-12 ruble-denominated bonds. As RBC Daily specifies, bondholders put a call on the bonds issued in 2013 with maturity of 2016 on Friday, November 28. Of the aggregate bond issue (Rub 3 bln), investors put up for redemption nearly two thirds (Rub 1.9 bln).
“This is in line with our expectations. A third of the investors decided to hold the paper," Sergei Pirogov, TCS Bank vice president for corporate finance, tells RBC.
The yield rate on the bonds equaled 10.25%, while the holders of the bonds who sought no redemption will get the one of 14% for the next six months. According to Pirogov, TCS Bank had no problems to pay the money to its bondholders. “At present, we have Rub 15 bln in cash, which is also held on current accounts at banks," he specified, adding that six weeks ago the bank put aside Rub 3 bln and was ready to redeem 100% of the bond issue.
Presently TCS Bank has two outstanding bonded loans maturing April and June 2015.
“We put the call option," said Raiffeisen Capital bond portfolio manager Konstantin Artemov, adding that it is a bit of a surprise that the investors presented not all bonds for redemption as the consumer lending segment raises big concerns on the part of investors. After the call option TCS Bank bonds are apparently held by those who are tolerant to the risk over the next six months and are confident in the sector’s prospects. In addition, many portfolio managers are witnessing an outflow of client funds and have to accept call options, he added.
BCS analyst Yulia Safarbakova thinks that, as far as TCS Bank is concerned, the point is not only the fact that investors lost confidence in the issuer, but the bank offered insufficiently profitable terms on the yield rate after the call option. According to her, yield rates on the bank’s other bonded loans range from 14% to 16%.
Safarbakova says that given the new yield rate offered by TCS Bank, it would be cheaper for the bank to fund operations using retail deposits. “The bank can be expected to increase funding using deposit accounts rather than by means of public debt," she pointed out. Presently the interest rate on TCS Bank’s 12+ month deposit accounts is 10.5%.
Pirogov pointed to overall falling demand for ruble-denominated bonds. “Main reasons are a notorious economic slowdown, the rate hike, oil prices and ruble depreciation. One cannot say that investors are losing interest in the bank in particular," Pirogov assured.
