The issue turned out to be absolutely market-oriented
The issue of state-guaranteed "nano-bonds" worth 33 billion rubles was one of the most remarkable transactions that put an end to the primary debt market at the end of the year. Having collected a solid book in the last days of December, the state corporation did not stint on the New Year's bonus for investors. In an interview with Cbonds Review (#1-2, January-February 2011, pp. 68-71) Anna Shah-Nazarova, Head of the Corporate Finance Directorate of Rosnanotech Group, shared her plans on how much debt and at what price RUSNANO expects to offer the market in the next two years. - At the end of December, Rosnanotech placed three bond issues totaling 33 billion rubles.
How would you rate the results of the debut? - Generally positive.
The placement of ruble-denominated bonds provided the corporation with an opportunity to diversify the sources of long-term financing of its activities and enter the public borrowing market. Investors appreciated the quality of the offer quite highly, despite the end-of-year factor and the difficult market situation. We have successfully placed the entire declared volume of bonds - 33 billion rubles - in the interest rate range that we expected.
- Is it possible to say that the deal was to some extent unique for the market? The deal took almost a year, and during that time I really had the opportunity to make sure of its uniqueness.
It has several distinctive features that distinguish RUSNANO issues even from a number of similar placements under state guarantees.
Firstly, the transaction itself was preceded by quite serious work to ensure its proper legal possibility. At the time of the decision on the need to issue bonds, the Corporation was a non-profit organization by its organizational and legal status. At the same time, the corporation was not directly legally assigned the right to issue bonds, hence the need to amend some legislative acts.
Secondly, the transaction was carried out against the background of preparations for the reorganization of the Rosnanotech Group into a joint-stock company, which was planned in accordance with the instructions of the President of the Russian Federation. Initially, it was assumed that the corporation could be transformed into a joint stock company before the end of 2010, which set a clear time frame for the placement. The fact is that if we did not have time to place the papers before the reorganization, there were big legal problems with the preservation of state guarantees. We did not have the opportunity to postpone the placement to a later date (as, for example, the AHML does, receiving state guarantees in one year and placing next year).
In addition, the process of obtaining state guarantees is quite lengthy and includes the issuance of two Government acts (a resolution on the rules for granting state guarantees and an Order on the provision of state guarantees - already for specific loans), the conclusion of an agreement with the Ministry of Finance and actually obtaining a guarantee.
Thus, before making a standard placement transaction directly, a huge legal work had to be done.
And the task of placing bonds before the new year also dictated the need for very clear actions in the shortest possible time, both in the marketing process and in the actual placement of securities.
In addition, it was extremely difficult to adequately place the largest one-time issue on the Russian market during the Christmas holidays just before the New Year.
- You are located at the upper limit of the landmark announced on the eve of the placement - 8.9%. Quite a generous offer in those market conditions, don't you think? - There was a rather difficult situation on the ruble bond market at the end of December.
The acceleration of inflation in the fourth quarter of 2010 contributed to the formation of negative expectations among investors regarding the further movement of interest rates. Most market participants were confident that the regulator would raise the refinancing rate by 50-75 bps in the next six months, which should lead to a similar increase in yields on the debt market. When setting the price benchmark, we certainly took into account all the factors that affect profitability, and set the upper limit of the coupon corridor below 9%, cutting off speculative investors who expect a significant premium compared to the secondary market. The expectations of the rate increase were partially justified in the afternoon of December 24, when the Central Bank of the Russian Federation raised rates on deposit operations by 25 bps. The fact that the pricing when placing RUSNANO bonds was market-based and maximally effective is also confirmed by the secondary market - the price of bonds at the beginning of secondary circulation in January 2011 was at the level of 100.25-100.4% of the nominal value. This corresponded to a yield to maturity of about 9% per annum.
- How was the offer of securities with a long duration perceived by the market? Do you feel there is an interest in long-term trading in the market? - During 2010, interest in securities with a long duration increased, but by the end of the year, including due to a significant deterioration in market conditions, it began to fade.
Now the market allows the possibility of starting a cycle of rate increases, so investors are very cautious about long trading. Nevertheless, there is interest.
- When choosing the placement format, RUSNANO Corporation preferred book building to an open auction. Why? - In my opinion, book building is a more suitable format, which makes it possible to optimize the placement process from the point of view of the relationship between the issuer, the organizers of the issue and investors.
Investors are not required to reserve funds in a trading system with an uncertain result on a transaction, and the issuer, together with the organizers, has the opportunity to influence the process of book formation, interact with investors, determine the rate and allocation. It turns out that the process is more insured against all sorts of unforeseen circumstances.
- How market-oriented was the issue, in your opinion, taking into account the fact that securities worth 24 billion rubles. bought out VEB? - The issue turned out to be absolutely market-oriented.
The paper is traded, the volumes are very decent. Different investors pursue different goals when buying securities. I don't see any problems with the fact that part of the issue was acquired by VEB - the bank's interest in such a high-class and low-risk paper with a good yield is quite understandable. This is a market acquisition. At the same time, 9 billion rubles went to other investors - this is a very large amount.
- What is the overall structure of investors in securities? - These are mainly institutional investors, commercial banks, financial companies.
- Do you agree that the main investment idea of the placed securities was the presence of the state guarantee of the Russian Federation? Is the presence of signs of "statehood" in the issuer very significant for investors in the current conditions? - It is difficult for me to assess 100% objectively what investors were guided by when purchasing corporate bonds.
Undoubtedly, for some, the key factor was the availability of a state guarantee. I have also repeatedly heard other opinions. After all, in the end we are not going to resort to guarantees, but we will pay from the cash flows generated by our projects. But I cannot but admit that we would not have achieved such a bid in the absence of guarantees.
- Is there any reason to believe that government-guaranteed bonds will be the topic of 2011 in the local debt market? - The program of state guarantees for 2011 is less than last year's.
However, issuers that received guarantees in 2010 will also enter the market. There is every reason to believe that the year will pass under the sign of papers with state guarantees. Investors, especially in a good market, are happy to purchase quasi-sovereign securities with a certain premium to the national debt.
- What is your forecast for the debt burden in the coming years? - The Corporation will pursue a balanced policy to attract borrowed funds in order to completely exclude cases of non-fulfillment of obligations.
For 2011-2015, the allocation of state guarantees for another 129 billion rubles is provided for RUSNANO, but this amount can be adjusted depending on the needs for investment resources.
- What volumes of placement on the debt market can be expected from RUSNANO in 2011-2012? - The budget provides guarantees for RUSNANO for 39 billion rubles in 2011 and 28 billion rubles in 2012.
When determining the volume of borrowings, we will proceed from the market situation and our needs for funds allocated to finance projects.
- Do you expect to borrow cheaper? - Yes, we expect to borrow cheaper relative to the market.
We will no longer have a bonus for the debut, nor the upcoming reorganization, nor, hopefully, accommodation during the Christmas holidays.
- Is it planned to finance the investment program only through the issue of bonds or including through the attraction of credit funds? - In 2010, the corporation not only placed bonds, but also attracted loans.
According to the decree of the Government, in addition to bond loans, it is provided for the provision of state guarantees for loans attracted by Rosnanotech Group of Companies of Bank SAINT PETERSBURG in the amount of up to 5 billion rubles. for a period of up to five years and loans from Sberbank of Russia for amounts up to 5 and 10 billion rubles and for a period of up to seven and up to six years, respectively. Diversification of borrowings is a normal practice that allows you to choose the forms of funding depending on market conditions, that is, to ensure the minimum cost of borrowed funds. We plan to continue to adhere to this practice in the future.
- How, in your opinion, will the reorganization of RUSNANO affect the assessment and attractiveness of the issuer's credit profile in the process of future placements? - I think it's positive.
At least one of the obvious advantages for investors will be a clear and well-regulated legal field for JSC.
- Are you planning to enter foreign capital markets? - RUSNANO's needs in foreign currency at the moment are not so significant as to take on currency risks.
In addition, guarantees are provided in the currency of the Russian Federation, so for now we plan to carry out ruble borrowings.
- How realistic are the plans for an IPO? - Such plans were indeed voiced by the leadership of RUSNANO, but this is a matter of at least a medium-term perspective.
- How many projects have actually been approved at the moment? - Currently, the total number of projects approved by the supervisory board is 104 with a total budget of 347 billion rubles, including the corporation's share of 140.1 billion rubles.
The required rate of return on a project depends primarily on the degree of risk and generally corresponds to market expectations of profitability of similar projects. The expected start date of cash receipts from mass exits from projects is two to three years.
According to Lux Research analysts, the volume of sales of nanomaterials in 2009 amounted to $1.1 billion, an increase of 32% compared to 2008. It is expected that in 2015 this figure will reach $2.9 billion, and the annual growth rate of the market will average 13.2%.In the segment of nanocomponents, sales amounted to $28.8 billion at the end of 2009, which is 57% more than the same indicator in 2008.
It is expected that in 2015 sales of nanocomponents will reach $498 billion with an average annual growth rate of 42.8%.If we consider the total market volume of goods produced using nanotechnology, according to Lux Research analysts, in 2009 it grew by 54% compared to 2008 and amounted to $223.8 billion.
At the same time, according to analysts' forecasts, the dynamic growth of sales of products manufactured using nanotechnology will continue in the period 2010-2015 by an average of 43.6% annually, and the market volume will reach $1963 billion in 2015.
Despite the dominance of sales volumes of products manufactured using nanotechnology, the highest net profit margin is characterized by sales of nanocomponents. According to Lux Research analysts, over the past years, the chemical industry and electronics have continued to be the main areas of application of nanotechnology, however, in 2012-2014, nanotechnology is expected to be actively integrated into the oil and gas industry, and in 2015 - into the food industry and the production of personal hygiene and cosmetics. Portal "Eternal youth" http://vechnayamolodost.ru