Belarus Sells $600M 5Yr Maiden Bond To Yield 9%-Source

By Kejal Vyas Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The government of Belarus raised $600 million in a five-year bond offer Monday as it took advantage of favorable market sentiment to price its first-ever foreign-currency sovereign bond.

The securities priced at 99.011 cents on the dollar and offered investors a yield of 9%, according to a person familiar with the transaction. The yield came in at the low end of the price guidance released by deal managers earlier in the day.

The deal comes as market sentiment eases after months of asset-price volatility stemming from concerns over the debt and fiscal problems across Europe. Sharp losses in global markets kept many investors away from riskier assets and also prevented debt issuers, especially those on the periphery of the developing world, from raising funds.

Still, the relatively high yield that the former Soviet Republic is offering attracts some investors at a time when bonds from larger emerging economies are offering only slight premiums to U.S. Treasurys notes.

"There are very few sovereigns that are out there at a 9% yield handle," said Dan Mullineaux, head of emerging-market debt trading at Knight Capital. "At the right price and when people aren't worried about external factors, they'll be willing to take a stab at a credit like Belarus," he said, adding that a few of his clients were looking to buy the securities on the secondary market.

Still, the risks tied to the country kept some like Gorky Urquieta, head of emerging markets at ING Investment Management, away from the deal.

"We struggled to find any reason to get involved. Either you'd want significantly more yield or we would have to like the fundamentals," he said. That's all the more difficult as "there are many things that we just don't know since it's the first time they're issuing."

BNP Paribas SA, Deutsche Bank AG, Royal Bank of Scotland Group PLC and Sberbank were lead bookrunners on the sale.

Belarus is rated B1 by Moody's Investors Service and B+ by Standard and Poor's Corp.

Terms were as follows:

Amount: $600 Million Maturity: August 3, 2015 Coupon: 8.75% Price: 99.011 Yield: 9% Spread: 727 basis points over Treasurys Ratings: B1 (Moody's Investors Service) B+ (Standard & Poor's)

-By Kejal Vyas,


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