VTB Capital Opens Australian Dollar Market for Russian Borrowers

VTB Capital is marketing the first Australian dollar-denominated bonds from a Russian borrower.

The investment bank may price five-year notes to yield from 7.5 percent to 7.6 percent, a person familiar with the matter said. VTB Capital may sell the securities as soon as today, with Australia & New Zealand Banking Group Ltd. helping it to manage the offer, the person said, asking not to be named because the terms aren’t set.

Australia’s bond market has provided funding for 73 issuers since June 30, the most for any six-month period since the second half of 2006, as investor demand for assets tied to the highest benchmark rate among major developed nations swells. Russia’s central bank may seek to hold as much as 10 percent of its reserves in the so-called Aussie, up from a 1 percent target it flagged last year, the Australian Financial Review reported Nov. 30, without saying where it got the information.

“Russia’s central bank buying the Australian dollar perhaps means the market has become more visible to borrowers like VTB,” said Martin Whetton, a Sydney-based interest-rate strategist at Nomura Holdings Inc. “It also suggests the Aussie market is becoming more sophisticated in its view on global credits.”

VTB Capital, part of VTB Group, is based in Moscow and offers investment banking services, according to its website.

Australia’s dollar has climbed 49 percent against the greenback since the end of 2008, the most among more than 150 currencies tracked by Bloomberg. No Russian borrowers have sold bonds in the South Pacific currency, according to data compiled by Bloomberg.

To contact the reporters on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net; Rachel Evans in Hong Kong at revans43@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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