March 28 (Bloomberg) -- Russia sold $7 billion of bonds, the most by an emerging-market government since 2009, as soaring oil prices boosted confidence in the world’s biggest energy exporter.
The government issued $2 billion of five-year bonds at 230 basis points over U.S. Treasuries, $2 billion of 10-year bonds at a spread of 240 basis points and $3 billion of 30-year bonds at 250 basis points, said a banker with knowledge of the deal who declined to be identified because he’s not authorized to speak publicly. The yield spread on a 2044 bond for similarly rated Mexico is 150 basis points and 131 basis points, or 1.31 percentage point, for Brazil’s note due in 2041.
The last time Russia issued 30-year securities was in August 2000, two years after its $40 billion domestic debt default. Today’s sale was the biggest among emerging markets since Qatar issued $7 billion of bonds in November 2009.
“Russia remains one of the most attractive investment-grade issuers out there, and as an oil exporter the valuation is still cheap to Mexico and Brazil,” Alvin Ying, an emerging-market strategist at UBS AG in London, said by phone today. “The issuance size was bigger than I had expected.”
The deal takes up the government’s entire quota for international debt issuance this year.
Russia, rated Baa1 by Moody’s Investors Service, its third-lowest investment-grade rating, last sold international bonds in May 2011, when it raised 50 billion rubles ($1.7 billion) with debt maturing in 2018. The government hadn’t issued dollar debt since April 2010.
Brazil is rated Baa2, one step lower than Russia, by Moody’s.
Rising oil revenue helped Russia achieve a budget surplus of 0.8 percent of gross domestic product last year. Urals crude, the country’s main export blend, has climbed 15 percent this year and is up almost threefold since the end of 2008.
The government’s debt is equivalent to 12 percent of gross domestic product, the lowest of any major emerging-market country, according to the International Monetary Fund. The economy grew a faster-than-forecast 4.3 percent last year.
BNP Paribas SA, Citigroup Inc., Deutsche Bank AG, Troika Dialog and VTB Capital arranged the sale.
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