LONDON and MOSCOW, May 13, 2013: CREDIT BANK OF MOSCOW, a privately-owned universal commercial bank operating in Moscow and the Moscow region, today closed a $500 million offering of 5.5-year subordinated Eurobonds with an interest rate of 8.70% p.a. The bonds were issued by CBOM Finance p.l.c., an Irish special purpose vehicle, for the purpose of funding a $500 million subordinated loan to CREDIT BANK OF MOSCOW.
HSBC, Raiffeisen Bank International and The Royal Bank of Scotland acted as joint lead managers and bookrunners on the offering, which was made pursuant to Rule 144A and Regulation S. HSBC was also the sole structuring adviser on the offering.
The loan proceeds are expected to be included in the calculation of CREDIT BANK OF MOSCOW's Tier 2 capital, subject to the Bank of Russia's final approval. This transaction is the first ever Eurobond offering in which the proceeds are intended to qualify as regulatory capital under the Bank of Russia's Regulation 395-P, which became effective on March 1, 2013 and which incorporates into Russian law the Basel III principles for the calculation of the regulatory capital of banks. In accordance with the new regulation, the bonds have interest and principal write-down features, which will be triggered if the bank's core Tier 1 capital adequacy ratio falls below 2% or if certain bankruptcy prevention measures are introduced in respect of the bank.
Morgan Lewis served as U.S., English and Russian legal adviser to CREDIT BANK OF MOSCOW on the offering. The Morgan Lewis team was led by Business and Finance partner Carter Brod, who was joined by a London-Moscow team including Business and Finance partners Yulia Cherkassova and Christopher Harrison and Business and Finance associates Vinay Varma, Edwin de la Rosa, Anatoly Alexandrov, Liya Grishaeva and Valentina Semenikhina.
"We are delighted to have been able to assist CREDIT BANK OF MOSCOW in being the first Russian bank to raise regulatory capital under Russia's new Basel III rules, thereby strengthening the bank's capital position in line with its growth strategy," Brod said.