VTB Capital has placed ESG bonds worth 137 billion rubles ($1.86bn)

In 2021, VTB Capital organised five placements of green and social bonds in the Russian and foreign markets with a total volume of 137 billion rubles ($1.86bn).

VTB Capital placed the following debt obligations with an ESG component:

*The issue of perpetual “green” Eurobonds of Russian Railways equalling CHF 250 million and a coupon of 3.125%. Russian Railways is one of the largest ESG borrowers in the local market and the only corporate borrower representing Russia in the green Eurobond market;

*Tap issue of perpetual Eurobonds of Russian Railways with a coupon of 3.125% in the amount of CHF 200 million;

*The issue of 4-year social Eurobonds of Sovcombank equalling $ 300 million and a coupon of 3.4%. Sovcombank is the first Russian bank to issue social Eurobonds; *The issue of 7-year “green” bonds of the city of Moscow in the amount of 70 billion rubles ($940.1 mn) and a coupon of 7.38%. The International Capital Markets Association has included Moscow’s green bonds in the register of sustainable development bonds;

*The issue of 5-year “green” bonds of Sinara-Transport Machines in the amount of 10 billion rubles ($134.3 mn) and a coupon of 8.7%.

Andrey Solovyev, Global Head of Debt Capital Markets at VTB Capital, said: “We are currently seeing an increase in investor interest in social and green bonds, and more and more market participants assess this factor as one of the most important when making a decision to invest. Consequently, more issuers are considering issuing debt obligations with an ESG agenda. In 2022, we expect to see the results of intense work focused on strengthening and improving the quality of ESG disclosure and planning on the part of issuers in the markets. This may be reflected both in the number of green instruments and issues, as well as in the overall attractiveness of the Russian market to ESG investors. VTB Capital is actively working on similar issues and we hope that in 2022 the number of placements of such instruments will continue to grow.

In addition, in the coming year we see the potential for the technological development of the market, including new opportunities for digitalization and the emergence of new financing structures for large, environmentally and economically significant projects.”

According to VTB Capital, in 2022, the redemption of foreign currency Eurobonds accounts for a little less than $18 billion. Many issuers have already refinanced issues that were due to be redeemed next year. Nevertheless, while maintaining a favorable market environment, a number of companies are considering the possibility of placing bonds in order to refinance issues due in 2023-2024.

Since its inception in 2008, VTB Capital has attracted $286 billion into the Russian economy through 973 bond issues, including $132 billion through 184 international bond issues. The development of “green” financing is one of the topics that will be discussed at the 13th VTB Capital Investment Forum “RUSSIA CALLING!”. The forum will be held online on November 30 — December 1. The broadcasts of the sessions and the forum program can be found on the official website.