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. Last Updated: 07/27/2016

Sberbank Bond to Fund Loans

LONDON -- Sberbank will use the proceeds of its planned bond to fund new dollar loans to Russian corporates, Alexander Tataurov, head of the bank's capital markets section, said Friday.

He was speaking at a conference in London to present a three-year dollar-denominated floating rate note that the retail savings giant intends to sell internationally next week, via lead manager UBS Investment Bank.

Bankers say the issue will be of benchmark size, which usually means $500 million equivalent or more.

"We need to match the liabilities of floating rate borrowers from Russian corporates," said Tataurov. "That is why we are here."

Sberbank is trying to shift its moneymaking operations away from making profits from government bonds and toward making more money from lending to companies and individuals.

In 2002, the bank earned 53 percent of its revenues from lending, compared with 47 percent in 2001. By contrast the interest income earned from securities fell to 21 percent from 29 percent over the same period.

Sberbank is marketing its bond in a comparatively favorable market environment. Russian government bonds are at four-month highs, following the decision last week by Moody's Investors Service to raise the country's foreign borrowing ceiling by two notches to Baa3, its lowest investment-grade rating.

The government is not expected to launch new bonds before 2004, and might not do so even then, leading to a scramble by international investors for new Russian issues.

Fitch Ratings has Sberbank at BB+, its only rating so far. This matches the Russian government, its highest speculative-grade rating. Sberbank officials said they were hoping for a Moody's rating before the bond's launch, which might also be investment grade.

The road show for the bond will visit Frankfurt on Monday, Vienna and Copenhagen on Tuesday and end in Milan on Wednesday.

Sberbank chairman and CEO Andrei Kazmin said Friday he did not foresee a change of ownership in the bank in the next three years.