Moscow, December 5, 2006
- The International Finance Corporation, the private sector arm of the World Bank, has provided a local currency partial credit guarantee to support the first bond issue of Rusfinance Bank, a Société Générale subsidiary. IFC’s guarantee will enhance the bank’s access to capital markets and expand its lending to thousands of retail consumers across Russia.
This bond issuance of $114 million equivalent is the first in Rusfinance Bank’s bond funding program, which is expected to reach at least $500 million equivalent. The Series 01 and Series 02 bonds are unsecured two-year bullet obligations of Rusfinance Bank and were issued in a principal amount of 1.5 billion rubles (about $57 million equivalent) each. Series 01 benefits from an IFC partial credit guarantee of 750 million rubles (50 percent of initial principal), while Series 02 carries a separate IFC partial credit guarantee of 600 million rubles (40 percent of principal). The IFC partial credit guarantees cover all interest and principal payment shortfalls up to the available ruble amount of the guarantee.
Troika Dialog, a Moscow-based investment bank, was lead arranger for the two bond series. The Series 01 were placed at par with a coupon rate of 7.65 percent per annum, and the Series 02 were placed at par with a coupon rate of 7.5 percent per annum. Both series were oversubscribed by approximately 2.5 times.
Jerome Sooklal, IFC’s Director for Central and Eastern Europe, said, “This investment will help create a standard in Russia’s domestic capital markets for high-quality banking debt paper. With IFC’s involvement, the issue is expected to reach a wide array of investors and will eventually stimulate secondary trading as well as the liquidity of these secondary markets.”
Jyrki Koskelo, IFC’s Director for Global Financial Markets, said, “IFC’s partial guarantee on Rusfinance Bank’s first bond issue will advance the bank’s efforts to develop multiple local currency funding sources for its fast-growing consumer finance business. In a broader context, this investment will serve to deepen the Russian financial sector by introducing efficient, sustainable funding mechanisms that could be replicated by the market.”
Jean-Luc Py, Head of Rusfinance Group, said, “We greatly appreciate the professionalism of IFC in developing an innovative scheme of financing for our booming activities.”
About IFC
The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit
www.ifc.org
.
About Rusfinance Bank
Rusfinance Bank is part of Rusfinance Group, the fully owned retail financing arm of Société Générale in Russia that was launched in August 2004. It specializes in consumer loans through a network of commercial partners (retail chains and car dealers) as well as direct loans by phone, post, or Internet. Rusfinance Group has 5,400 employees and serves 800,000 clients in more than 60 regions throughout Russia. Its credit portfolio amounts to 22.2 billion rubles ($830 million), while car loans contribute 69 percent and consumer credits 28 percent. In November 2006, Standard & Poor’s assigned Rusfinance Bank an international rating BB/B while confirming a rating “ruAA” on the national scale, one of the highest ratings among Russian banks. According to the Interfax Center for Analysis, as of mid-2006 Rusfinance Group ranked 14th among Russia’s top 20 credit institutions in terms of retail loans.
