VEB's Borrowing Record. The Bank Arranged $500 Million Credit at LIBOR+0.9%

29 july 2005 года
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Author: Ivan GORDEEV

Government Vnesheconombank (VEB) took advantage of Russia's improved sovereign rating by borrowing 500 million dollars from international banks for a period of three years at LIBOR+0.9. Russian financial institutions have never borrowed so much at such a low rate.

Yesterday, Vnesheconombank Chairman Vladimir Dmitriev signed an agreement on extending a syndicated credit by international banks to VEB. The syndicate's lead managers were ABN Amro, Dresdner Bank and Deutsche Bank. Besides them, 40 banks participated in the deal such as Citibank NA, Dresdner Kleinwort Wasserstein, JP Morgan Chase, ING Bank, HSBC, Bayerische Hypovereinsbank, Bank Austria Creditanstalt, Calyon, ICICI Bank, Fortis Bank and others.

VEB plans to use the funds received to finance its customers' operations. As Mr. Dmitriev put it, the Bank has more than 15 projects to finance by using this credit. He said that the funds would be, above all, invested in oil refining, space and chemical industries, transport and diesel engineering, telecommunications.

VEB broke Vneshtorgbank's (VTB) record. At the start of the year, this bank obtained a three-year syndicated credit worth $450 million at LIBOR+1.2%. As was the case with VTB the subscription to VEB's debut credit by potential participants exceeded greatly the initially planned value of the deal ($300 million) and was about $600 million. According to Dmitriev, most European financial institutions took keen interest in this syndicated loan. "The Bank is associated with sovereign risk", - said Vnesheconombank's Chairman.

Analysts stressed that VEB managed to capture the right moment to borrow money. "Russia is making early payments on its foreign debt, its gold and foreign exchange reserves are on the rise, markets are influenced by the rumors that Russia's sovereign rating is going to rise, - says an expert. - First class banks take keen interest in extending such syndicated credits". Furthermore, as opposed to other Russian financial institutions, VEB's set of ratings is unique (BBB - with respect to liabilities in foreign currency from Standard & Poors and Fitch, and Ba1 rating- from Moody's ). S&P explains that VEB is not related to the government as its parent structure alone but also acts as its agent for servicing foreign debts and recovering Soviet-era debts, it also acts as the state management company responsible for investing pension funds.

By the way, VEB has no plans to arrange further loans, as Mr. Dmitriev puts it, the Bank has sufficient funds to finance its current package of projects.

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This does not have anything to do with Yuganskneftegaz

17 june 2005 года
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Vnesheconombank ChairmanVladimir Dmitriev (Interfax)

Mr. Dmitriev made it clear that VEB was not involved in the scheme under which Rosneft purchased Yuganskneftegaz and the question of financing the deal from MinFin's funds through Vnesheconombank had never been raised. VEB received a credit from Chinese banks to finance Rosneft's long-term uninterrupted oil supplies to China, and this has no relation to YUKOS' largest asset.

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