i c energy, london, november 2011 1 ebrd’s role in the syndicated loan markets of russia & cis...

I C Energy, London, November 2011

1

EBRD’s role in the syndicatedloan markets of Russia & CIS IC│EnergyCorporate Financing in Russia & CIS

London24th-25th November 2011


2

EBRD’s role

Longer-term capital mobilisation

Keeping credit flowing to the financial sector

Helping corporate balance sheet restructuring

Promoting innovation in infrastructure finance


3

The fallout from the Eurozone crisis

“Eastern Europe has most to fear from banks’ retreat”

– Financial Times 15th November 2011

In CIS, Russia has least to fear

Pressure from head office and home regulators to repatriate or retain capital at the centre

– Open statements from Unicredit and Commerzbank

– Others?

If traditional large suppliers of credit retrench, economic disruption seems inevitable


4

Infrastructure lending outlook

Basel III makes infrastructure assets unattractive

InfraNews, 3rd November 2011

– Some key quotes:

“For most banks it’s not a prudent use of their capital to sit on these assets for 20 or 30 years. It’s not what they raise equity for.”

“They didn’t raise capital to [book] a 29 year loan for a toll road [but] to get the hedge, the cash management and the upfront fees.”

– Bob Dewing, Columbia University Business School (and 26 years Citigroup)


5

EBRD: some key figures

• Owned by 61 countries + two intergovernmental institutions

• AAA/Aaa rated, EUR 30 bn capital base• Emphasis on private sector development and

entrepreneurship• Private sector approx 80% of portfolio• Mobilises significant foreign direct investment• Promotes infrastructure development• Promotes environmentally sound and sustainable

development• EBRD operates in 29 countries via 35 offices• Invested EUR 64 bn in > 3,100 projects since 1991*• Portfolio: 83% debt, 17% equity

* To end-March


6

2010 volume by region

Turkey5%

Central Asia11%

Eastern Europe & Caucasus

17%

South - Eastern Europe & Balkans

24%

Russia26%

Central Europe & Baltics16%


7

2010 volume by sector

Equity Funds4%

Transport16%

Financial Institutions24%

Power & Energy15%

Property & Tourism3%

Telecoms Informatics & Media1%

Municipal & Env Inf6%

Natural Resources8%

Manufacturing & Services10%

MSME Financing13%


8

Promoting local currency debt markets

*EBRD’s local currency loan portfolio (“A” loans): EUR 3.9 bn as at end January 2011

HUF2.6%

RON3.5%

CZK2.6%

BGN0.8%

SKK0.9%

RUB50.7%

UAH0.1%

GEL0.4%

MDL0.1%

AZN0.5%

TRY2.1%

KGS0.5%

AMD1.0%

MNT0.2%

PLN29.4%

KZT4.6%

EBRD local currency loan portfolio: EUR 5.1 bn equivalent*

RUB 51%of LCY portfolio


9

Russia – top ten syndicated loan providers 2010(and EBRD Russia volume 2010)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50 Of which > 90%at 5 yrs or longer

US

D b

n


10

Russian borrowers by %, 2010-2011:concentrated at the top of the credit curve

Other47%

VEB11%

Tatneft10%

Gazprom-Neft9%

Metallo-invest

5%

Severnefte-gazprom

5%

Sberbank4%

Renova4%Mechel

5%TNK-BP5%

> 50% captured by 9 names and 3 sectors


11

EBRD’s value added

Debut borrowers and borrowers down the credit curve

Borrowers requiring longer tenors (including the big names)

Groundbreaking transactions – PPPs, projects requiring long lead times and investment in policy dialogue; promoting an enabling environment

Specialised teams across numerous sectors:

– Financial Institutions - Industrial

– Power - Municipal

– Natural Resources - Telecoms

– Real Estate

Long-term local currency lending – RUB/KZT


12

EBRD’s syndication successes

PPPs and infrastructure

Manufacturing and industry

Balance sheet restructuring

Environmental investments

Financial institutions


1313

Infrastructure - transport

PULKOVO AIRPORT (Russia) – EUR 200 mm for the reconstruction and expansion of St. Petersburg’s

Pulkovo Airport managed by Northern Gateway (“Concessionaire”), a company indirectly set up and currently owned by VTB Group, Fraport and Copelouzos Group

– This is Russia’s first PPP in the airport sector

– The loan is part of a long-term debt package of about EUR 716 mm put together by 5 IFIs and Russia’s Vnesheconombank

– EBRD A Loan EUR 100 mm; 15 years

– EBRD B Loan EUR 100 mm; 12 years

– Signed July 2010


1414

Infrastructure - power

Paravani Power Plant (Georgia)

– USD 63.5 mm 15-year senior loan to Georgian-Urban Enerji Ltd for the construction, financing, operation, maintenance and management of the Paravani hydro power plant and the transmission lines (allowing connection to the Georgian grid and export to Turkey)

– EBRD A Loan USD 52 mm; 15 years

– EBRD B Loan USD 11.5 mm; 15 years

– USD 52 mm Parallel Loan from IFC

– Signed August 2011


1515


EDPR Cernavoda & Pestera wind farms (Romania)

– EUR 188 mm EBRD and IFC joint project financing for the construction, commissioning and operation of two adjacent wind farms: Pestera (90 MW) and Cernavoda (138 MW), both located in SE Romania

– EBRD A Loan EUR 69 mm; 14.5 years

– EBRD B Loan EUR 25 mm; 14.5 years

– EUR 94 mm Parallel Loan from IFC



1616


HIDROELECTRICA S.A. (Romania)

– EUR 110 mm senior loan to finance the rehabilitation of six units at Stejarul Bicaz, a 50-year old hydro power plant with a total capacity of 210 MW on the Bistrita River in the north-eastern Romania

– Hidroelectrica has a market share of 35% in Romania, with a network of 273 power plants and pumping stations with a total capacity of 6,482 MW

– EBRD A Loan EUR 69 mm; 14.5 years

– EBRD B Loan EUR 25 mm; 14.5 years



1717


Kazakhstan Electricity Grid Operating Company (Kazakhstan)

– USD 156 mm senior loan for refinancing purposes and for financing CAPEX associated with the rehabilitation of substations and high-voltage equipment

– The first syndicated loan for a Kazakh borrower since the global financial crisis (October 2008)


– EBRD B Loan USD 70 mm; 12 & 15 years

– Signed May 2011


1818


Termoelektrarna Šoštanj d.o.o. (TEŠ) (Slovenia)

– EUR 200 mm to finance a EUR 1.2 billion investment plan to replace four ageing power generation units with a new 600 MW unit utilising supercritical technologies

– TEŠ is the largest power generation plant in Slovenia with an installed capacity of 779 MW, generates, on average, one third of the energy in Slovenia.

– EBRD A1 Loan EUR 80 mm; 15 years

– EBRD A2 Loan EUR 20 mm; 12 years

– EBRD B1 Loan EUR 80 mm; 15 years

– EBRD B2 Loan EUR 20 mm; 12 years

– Signed January 2011


1919


SEDAS (Turkey)

– USD 175 mm to SEDAS as part of a larger USD 325 mm facility that is being co-financed with an IFC USD 150 mm A/B loan, to be utilised to enable SEDAS to make considerable efficiency and environmental improvements in its distribution network

– SEDAS is the first electricity distribution company to be privatized in Turkey


– EBRD B Loan USD 75 mm; 12 years

– USD 150 mm IFC Parallel Loan

– Signed December 2010


2020

Transport

BRUNSWICK RAIL (Russia)

– USD 200 mm to finance the purchase of over 5,000 new railcars, primarily gondolas, to help meet growing demand as the Russian rail freight market recovers from the downturn it suffered in 2008-2009

– IFC in parallel negotiations to raise an additional USD 100 mm for the same project in conjunction with this loan





2121

Transport

InterLeaseInvest LLC (Ukraine)

– Borrower: a fast growing privately owned provider of rail cargo transportation and railcar operating leases to corporate clients in Ukraine

– Project: USD 90 mm to finance rail stock financing

– The first EBRD syndicated loan transaction to a privately owned provider of rail transportation services in Ukraine



– B Loan 1.5 times oversubscribed

– Signed September 2011


2222

Natural Resources

Kubgas (Ukraine)

– USD 40 mm 7-year senior loan for the development of on-shore gas and condensate fields in the Lugansk region, eastern Ukraine, in the period of 2013

– One of very few transactions in Ukraine with a long term tenor for an independent natural resources sector company



– Signed May 2011


2323

Agribusiness

MK Group and Sunoko (Serbia)

– EUR 80 mm capex, working capital financing and balance sheet restructuring senior secured loan

– The first international syndication with EBRD’s involvement in Serbia after the global financial crisis in the agricultural sector

– EBRD A Loan EUR 40 mm; 5 & 7 years




2424

Heavy industry debt restructuring

ALRO S.A. (Romania)

– USD 180 mm for Alro, the largest primary aluminium producer in Central and Eastern Europe, for refinancing purposes

– Alro is 88% directly and indirectly owned by Vimetco N.V. and 10% by Fondul Proprietatea S.A. (a Romanian state-owned investment vehicle), with the remaining 2% of shares in free float

– EBRD A Loan USD 75 mm; 5 year Term Loan and 3 year Revolver

– EBRD B Loan USD 105 mm; 5 year Term Loan and 3 year Revolver



2525


PROMSVYAZBANK (Russia) – USD 250 mm to club deal, which was the first syndicated loan

transaction for a private Russian bank in 2010


– EBRD B Loan USD 150 mm; 1 year

– The B Loan was oversubscribed and closed at senior level as a club with the participation of 11 commercial banks

– Signed June 2010


2626


TransCapitalBank (Russia)

– USD 13 mm senior loan for on-lending to local small and medium-sized enterprises

– The first time an institution with a specific mandate to act as a socially responsible lender participates as co-financier to raise funds for a Russian borrower

– EBRD A Loan USD 10 mm; 4.5 years




2727


Credit Europe Bank (Russia)

– USD 250 mm EBRD and IFC joint senior syndicated loan facility for trade finance, corporate, SME and retail financing

– One of very limited number of syndicated loans completed for a private mid-sized Russian bank since the global financial crisis (October 2008)

– Syndication oversubscribed, raising double the sum originally intended from a wide range of investors (16 commercial banks)


– EBRD B Loan USD 75 mm; 1 year, with extension option for another year



2828


Raiffeisen Bank S.A. (Romania)

– EUR 150 mm senior loan for trade finance, corporate, SME and retail financing

– The first syndicated loan transaction in the financial sector in Romania since the global financial crisis (October 2008), aimed at re-opening access to debt capital markets for Romanian commercial banks

– EBRD A Loan EUR 40 mm; 5 years




2929


Bank Eskhata (Tajikistan)– USD 8 mm senior loan for on-lending to local micro and

small enterprises

– The first syndicated loan transaction in Tajikistan since 2008 and a first time a German cooperative bank committed to socially responsible lending has invested in Tajikistan alongside EBRD as a B lender





30

Basel III: capital required as % of RWAsBuild-up of common equity and buffers over time

0%

2%

4%

6%

8%

10%

12%

14%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Common Equity (min) Additional Tier I (max) Tier II (max) Cons. Buffer (min) Anti-cyc. Buffer (range)

• Improvement in quality of capital• Risk weighting of assets to be refined• “Big bank” surcharge tba

Implementation begins 1 January 2013 and member countries must transfer B3 into law by that time Treatment starts 1 January 2018


31

Banking sector capital and liquidity shortfalls*vs Basel III 2019 requirement (EUR billion)

0

500

1000

1500

2000

2500

Capital Short-termliquidity

Long-termliquidity

Europe

0

500

1000

1500

2000

2500

Capital Short-termliquidity

Long-termliquidity

United States

* McKinsey estimates


32

Outlook

Basel III will dominate and shape banks’ lending appetites

Gradual but uneven recovery of loan markets

Strong names can choose from several pools of capital

Division between high- and low-quality credits will persist

Simpler loan structures will prevail into 2012


33

Thank you for your attention!Lorenz JorgensenDirector, Head of Loan Syndications

Tel: +44 20 7338 6902Email: [email protected]

All loan market data sourced from Dealogic LoanAnalytics or LoanRadar

i c energy, london, november 2011 1 ebrd’s role in the syndicated loan markets of russia & cis...

Documents