Holding eurobonds of FC Otkrytie has become too risky - to this conclusion came the owners of securities of the bank, which began to sell them actively. Can not contain the panic and increase the yield of bonds to 8.5% per annum.
The fuss began as the Analytical Credit Rating Agency (ACRA) assigned a rating to the FC Opening Bank BBB- (RU) and published a corresponding message. As a result, the value of subordinated Eurobonds with redemption on April 26, 2019 dropped from 106.8 to 102.68% of the nominal value (data for July 7, 16:50 Moscow time), the head of the financial markets analysis department of KIT Finance Vasily Koposov states. The volume of this issue is $ 500 million.
The last time until such a cost paper fell in March 2016, follows from the data of Bloomberg.
Thus, the yield of this paper has reached 8% per annum, says Koposov. On Thursday, July 6, the yield was 8.5%, rising from 6% - the value on which it was entrenched on Friday evening, June 30, says Alexei Tretyakov, CEO of MC Arikapital.
This yield is very high for Russian Eurobonds with maturity in 2019, Koposov said. So, if you take the analogue of this paper - the subordinated Eurobond of Promsvyazbank with maturity in 2019 and the same credit rating from Moody's (B2), then its yield to maturity is 5% (coupon 10.2%, redemption in November 2019), Compares the tools of the Copes.
Raising profitability means that some investors, having revised their risk assessment for these bonds, began to sell the paper - because of this, the yield to maturity increased, Koposov explains.
As stated in the bank's materials, this issue of Eurobonds does not involve conversion into equity, because it was issued before the introduction of the relevant norms of "Basel III", explains the senior director for financial organizations Fitch Alexander Danilov. "Early repayment or early repayment of such a loan is allowed provided that a representative agreement is received by the Central Bank. But in practice, there have been cases when banks, in order to earn, bought their cheapened bonds on related and friendly structures. This was especially common in the crisis, "- said Danilov.
According to Tretyakov, despite the fact that the paper is not converted into capital according to the terms of issue, investors still traditionally perceive subordinated securities as instruments with increased risk.
The reasons for increasing the profitability of the bank's securities are two, says Alexei Tretyakov. The first is, of course, the rating and the press release of ACRA. On July 3, ACRA awarded Bank "Otkrytie Otkrytie" a BBB- rating on the national scale with a "stable" outlook. This rating means that since July 14, the funds of the federal budget, as well as pension accumulations of non-state pension funds (NPFs), will not be available on bank deposits of FC Opening. In addition, the bank's securities issued after July 14, due to insufficient rating will not be included in the Lombard list of the Central Bank (the minimum acceptable rating is BBB on the national scale). Investors on the day of rating assignment told RBC that they were surprised by the assessment of ACRA.
The agency first assigned such a low rating to a private backbone bank (for comparison: Alfa-Bank's rating (eighth in the Interfax-CEA rating) - AA, and Moscow Credit Bank (ninth) - A-), RBC wrote.
The second reason, Tretiakov lists, is the external background. This week investors sold eurobonds of Russian issuers against the background of falling oil prices, he says. "So, if you look at a longer horizon, in general, in mid-June, Russian securities denominated in foreign currency became cheaper, as there was an increase in the Fed rate. The increase in profitability as a result of this amounted to 0.3-0.5% on average, "- says Tretyakov.
Due to the fact that the bank is unlikely to be able to attract funds from pension funds, and new bond issues will not be included in the CB lombard list, investors are forced to take into account the risks of increased pressure on the bank's liquidity, commented the head of the Expert RA Validation Department Stanislav Volkov. "We also need to take into account that the bank will not be able to prolong old bond issues, as the Central Bank may introduce a prohibitive correction factor, as it happened in May 2017 with the issues of banks that did not meet the previously introduced rating requirements," warns Volkov. As a result, bonds of several banks, including Binbank, Soyuz bank, Novikombank, Derzhava bank, Vostochny bank and other banks, were subject to stricter requirements, he said.
Further dynamics largely depends on the actions of the bank "FC Otkrytie", Aleksey Tretyakov asserts. In theory, large issuers support their issues, buying part of them on the market, within one or two days after a sharp change in yield.
"If such support is not provided in the coming days, this may indicate an insufficient level of liquidity for such operations, which will cause anxiety among investors," says Tretyakov.
So far, the increase in profitability is not continuing, on July 7, even a 0.3% decline occurred, Tretyakov said. This may be a signal that some structures still buy paper, but you can not say for sure, since the traffic is small, Tretyakov believes. At the same time, the yield of the issue of senior Eurobonds, which do not enter capital when certain events occur, increased by 0.3%. A source familiar with the situation in the credit institution said that the bank does not support this paper with purchases from its side.
"We expect that soon, when emotions fall, yields on this paper will return to normal levels," said Konstantin Tserazov, member of the board of FC Otkritie. "We consider the yield growth on this paper to be a short-term emotional reaction of a very narrow layer of investors who are oriented to subordinated issues and have a more speculative attitude." He points out that the dynamics of the rest of the bank's securities as a whole corresponds to how the instruments of other issuers of comparable quality behave.
"We believe that these emotions are caused by the rating of ACRA, there are no other factors for the growth of profitability. This happens on extremely small volumes, that is, only a very small number of holders are ready to sell the paper, mostly non-institutional investors, "Tserazov asserts.
The bank has another issue of subordinated eurobonds with maturity in December 2019. However, its volume is less - $ 300 million, and the issue is not liquid, so it will not be entirely correct to rely on its yield, Tretyakov said. The same goes for ruble bonds, he believes.
If you look at other types of issues, then the bank has two issues of unsubordinated Eurobonds, which also increased profitability, but it is not so significant, says Tretyakov. "One issue is $ 400 million with maturity in November 2019, the second - $ 500 million with maturity in April 2018. They have an increase in yields increased this week from 4 to 5%, which is not so much, "states Tretyakov.
According to the new rules introduced by the Bank of Russia on July 14, only the accredited agencies "Expert RA" and ACRA can issue ratings on the national scale. However, Expert RA ratings have limited opportunities: their scale is accredited by the Central Bank only for the banking sector and the constituent entities of the Federation. In addition, the participants of the market had no information until July 7 whether the securities of issuers of only ACRA ratings would be admitted to the Lombard list of the Central Bank. But on July 7, the Central Bank announced that the ratings of Expert RA will also be taken into account when receiving funding from the CBR for repo operations. "FC Opening" is now working on obtaining a rating from "Expert RA", added Tserazov.
According to Rusbonds, in circulation, FC "Otkrytie" has 11 ruble bonds with a total volume of 77.2 billion rubles and six currency deposits with a total volume of $ 2 billion. Vadim Belyaev, the owner of the parent company of the bank, JSC "Otkryt Holding", has friendly relations with Head of the Central Bank Elvira Nabiullina. They decided to explain the large sums received by the "Discovery" structures from the Central Bank, for example, 127 billion rubles allocated for the rehabilitation of the bank Trust. Earlier, the agency ACRA drew attention to the artificial understating of losses of the bank "Ugra" father and son Khotinykh.