On 27 May 2021, Moscow City placed the first green subfederal bond issue worth 70 billion roubles on MOEX’s Sustainability Sector, with BCS Global Markets acting as the Co-Arranger.
The 74th Moscow City bond issue worth 70 billion roubles was placed in full, with х1.23 oversubscription after receiving 721 bids with a total size of 86.3 billion roubles. The coupon was set at 7.38% per annum (yield to maturity at 7.52% per annum). The issue with a seven-year maturity was assigned a credit rating of 'AAA(RU)' by Russia’s rating agency ACRA and is also available for settlement through Euroclear and Clearstream.
After the verification procedure, ACRA confirmed that the issue complies with the Green Bond Principles (GBP) of the International Capital Market Association (ICMA) and the Guidelines for the Promotion of Green Investments in the Russian Federation, developed by VEB.RF.
The bond issue has been include on the ICMA’s Sustainable Bonds Database. The proceeds from the bond placement will be used to achieve the targets outlined in Moscow’s Green Bond Concept, including replacing diesel buses with electric buses and building a new Greater Circle metro line.
"The results of Moscow’s green bond offering are in line with our expectations and calculations. Investors have demonstrated their interest in financing environmental projects in the city and confirmed the high potential of sustainable finance in Russia. All 609 bids worth more than 700 million roubles submitted by retail investors have been executed, with the main investors being banks, investment funds, and asset management firms,” said Elena Zyabbarova, Head of Moscow’s Department of Finance.
"The offering's full volume was placed, reflecting active interest from investors. The premium to the OFZ zero coupon yield curve was 52 bps, which is quite a fair level.," said Natalya Vinogradova, Deputy Head of DCM at BCS Global Markets.
Moscow ('Baa3' by Moody's, 'BBB-' by S&P, 'BBB' by Fitch, 'AAA(RU)' by АCRА) is the capital of the Russian Federation and Europe's biggest city with a population of 12.7 million. Over the past years, the capital has seen a stable inflow of investments, particularly from foreign investors and entrepreneurs. The city authorities have embarked on a major improvement project. According to the 2020 financial report, Moscow's GRP was 19 trillion roubles (~1/5 of Russia's GDP), with budget revenue of 2.9 trillion roubles, and public debt of 30 billion roubles (~1% of revenue).
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