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VTB Considers Debt Sales in China, Indonesia in Move From Dollar

VTB Group, Russia’s second-largest bank, is planning to move a third of its debt into currencies other than the dollar by 2015 by issuing bonds in Asia and Brazil, according to the deputy chairman.

VTB will sell about S$400 million of notes in Singapore this quarter and is “definitely” looking at issuing Dim Sum debt, bonds denominated in Chinese yuan and sold in Hong Kong, Deputy Chairman Herbert Moos said in an interview yesterday at Bloomberg’s headquarters in New York. VTB is also looking at selling Islamic bonds, or sukuk, in Indonesia, he said.

“The philosophy in all those issuances is not to issue into size but to issue into demand,” Moos said. “It also relieves the pressure on our Eurobonds when you route supply into a new investor base.”

The Moscow-based bank, controlled by Russia’s government, sold S$400 million of bonds due this August in Singapore in 2010, and another S$300 million of 2014 notes in May last year. It also has debt denominated in Belarusian rubles, Ukrainian hryvnia, yuan, Kazakh tenge, Turkish lira, British pounds and Swiss francs, as well as in dollars, euros and rubles, data compiled by Bloomberg show.

Moos said in April last year that the bank wanted to become the first Russian borrower to sell Shariah-compliant debt, and was aiming to raise about $200 million in 2011 selling sukuk, debt that complies with Islam’s ban on interest.

The lender wants to establish “an infrastructure for issuing sukuk” as Russia also has a large Muslim population, Moos said yesterday. As much as 15 percent of Russia’s 138 million-strong population is Muslim, according to U.S. government data.

VTB is also looking at selling bonds in Brazil, where it did a non-deal roadshow last year, Moos said. The bank has been cooperating with Sao Paulo-based Banco BTG Pactual SA on deals, he said.

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