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IFC Launches Volga Bond, Marking Largest Domestic Placement in Russia by an International Issuer

Moscow/Washington, D.C., November 28, 2012 – IFC, a member of the World Bank Group, today launched an inaugural Volga bond, raising 13 billion Russian rubles (equivalent to about $410 million) for private sector development. The five-year bond is IFC’s first ruble-denominated bond placed in the Russian market. It is the first corporate bond issued in Russia that has its coupon linked to an inflation-target index, and the largest domestic placement by an international issuer.
“Vibrant, efficient domestic capital markets are the foundation for shared prosperity and lasting growth,” said Jingdong Hua, IFC Vice President and Treasurer. “They provide long-term funding for key economic sectors such as infrastructure, and protect against capital-flow shocks. Developing such markets is a cornerstone of our strategy in emerging markets, and a priority for IFC.”
IFC’s bond is aimed for investors who benchmark their returns to the difference between predicted and actual prices. It is linked to an index that broadly approximates the performance of the Russian Consumer Price Index. Such inflation-linked issuances will pave the way for a market-based mechanism that can reduce the adverse impacts of inflation on real returns earned by Russian investors.
Tomasz Telma, IFC Director for Europe and Central Asia, said: “The Volga bond supports IFCs strategy to strengthen domestic capital markets in Russia. It offers a high-quality investment alternative for institutional investors such as pension funds and will encourage greater investor participation in the markets. It will also increase access to long-term local currency finance, protecting firms from currency risk as they grow and create jobs.”
IFC gained approval from the Russian Federal Service for Financial Markets to issue ruble-denominated bonds in the country’s capital markets earlier this month. The approval enables IFC to issue up to 23 billion rubles (approximately $730 million).
IFC issues bonds as part of its regular program of raising funds for private sector development. Ruble proceeds from the Volga bond will be used to invest in private sector companies in Russia. A portion of the proceeds may be swapped into floating-rate U.S.-dollar funds that are available for IFC investments in a variety of emerging markets.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges. . For more information, visit .
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