International bond market roundup

Goldman Sachs

Goldman Sachs Group Inc., the bank with the biggest trading profits on Wall Street, is losing market share underwriting corporate bonds as it seeks to boost its image as a company adviser rather than a USD 900 billion hedge fund. The most profitable firm in Wall Street history has slipped to 10th in helping the world’s companies raise debt, down from ninth last year and as high as third place in 2003, according to data compiled by Bloomberg. Its share of this year’s USD 1.9 trillion in global offerings dipped to 3.7 percent, from an average 4.8 percent in the previous 10 years.

Ireland

Ireland sold Euro 600 million of treasury bills, two days after the country’s credit rating was cut by Standard & Poor’s. Ireland’s National Treasury Management Agency sold Euro 200 million of securities due 14 Feb 2011 at an average yield of 1.978 percent, compared with 2.458 percent in an Aug 12 sale. The agency sold euro 400 million of 18 April 2011 debt at an average yield of 2.348 percent, compared with 2.81 percent.

Italy

Italy sold the full allotment of zero coupon 2012 notes, attracting the same level of demand as the last time it auctioned the securities.

The Euro 4 billion of notes were sold at an average yield of 1.721 percent and attracted bids worth 1.58 times the amount offered. Italy sold Euro 2.5 billion of the same securities at an average yield of

1.643 percent and a bid-to-cover ratio of 1.58 on July 27.

Romania

Romania aims to raise at least Euro 1 billion from a planned sale of euro-denominated bonds on international markets by the end of this year, Finance Minister Sebastian Vladescu said. “We’ll issue bonds with a maturity of over five years, we might aim for seven years depending on market conditions,” Vladescu said in an interview with Bloomberg News this week. “We’re definitely not going to issue this month or next.” When asked if the ministry is considering selling bonds by November or December, Vladescu answered in the affirmative.

Romania wants to raise funds on international markets for the second time this year as part of a plan to sell as much as Euro 7 billion of foreign-debt over three years. The Finance Ministry selected Vienna-based Erste Group Bank AG and Paris- based Societe Generale SA to manage the sale.

Russian Corporate Bonds

Investors in Russian corporate bonds are facing losses after the plunge in U.S. Treasury yields to near record lows spurred VTB Bank to become the nation’s first lender to pass up an option to repay debt before it’s due. Russia’s second-biggest lender said on 20 Aug that its Bank VTB North-West unit won’t exercise an option to redeem USD 400 million of debt on 1 Oct. The interest rate VTB pays on the bonds, which is tied to Treasuries, will drop to 376 basis points over the five-year Treasury yield, reducing the coupon to about 5.1 percent from 6.2 percent, for savings of about USD 4.4 million a year.

The notes fell the most in 20 months and dragged down bonds of Russian Agricultural Bank and Russian Standard Bank, on speculation they will also forgo call options.

“We decided not to call the option because it’s very beneficial for the bank and the shareholders right now,” Jyrki Talvitie, the head of investor relations at Moscow-based VTB, said in an interview this week.

Data compiled by MPM Capital Investments Ltd of 81, B.Bontadini Street, B’Kara. MPM Capital Investments Ltd is licensed to conduct Investment Services Business by the Malta Financial Services Authority. You may contact MPM on info@mpmci.net or 21493250.

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