TFR Deal of the Year 2004: Gazprombank, Russia

Feature

posted 23 Feb 2005 in Volume 8 Issue 4

Gazprombank, Russia: Russian bank deal pushes trade-finance envelope

MLAs: Deutsche Bank & ABN Amro

Borrower: Gazprombank, Russia

Deal size: $275m

Tenor: one year

Structured trade finance comes into its own in Russia and none more so than with the April-signed transaction for Russia’s Gazprombank. Deutsche Bank and ABN Amro led the $275m one-year, trade-related financing, which, when signed, was the largest single unsecured trade-finance-related term loan for a Russian bank.

Deutsche Bank acted as mandated lead arranger jointly with ABN Amro and was additionally joint bookrunner and facility agent. A total of 39 banks participated in the deal, originating from Europe, Asia, North America and the Middle East. And such was the success of the syndication that the deal was raised to $275m from an original launch target of just $75m.

“At the outset, Gazprombank’s borrowing requirements were fairly modest,” says Ben Dobson, director of global trade finance at Deutsche Bank. “Yet the syndication went so well that we had to return to the borrower and ask whether it wanted to take up the very sizable oversubscription. They had trade-related contracts able to cover the additional borrowing so were happy to make the deal a landmark facility in terms of size.”

The facility includes an extension option and carries a margin of 1.8% over Libor, reflecting Gazprombank’s status as Russia’s third-largest bank with total assets measured at $6.9bn in October 2003.

“The success of the syndication reflects the continued growth of the Russian economy as well as the market’s increased confidence in top-tier banks and Gazprombank in particular,” adds Dobson. “Yet there is also no doubt that the pricing had a direct effect on appetite. This was early on in a year that, barring disasters, was likely to see Russian risk significantly improve. I think banks realised the deal was likely to represent good value, even though at the time it was setting a benchmark.”

Bank of Tokyo-Mitsubishi, Citigroup, Depfa Investment Bank, Finansbank, Garantibank International and JPMorgan came in as arrangers, while Abu Dhabi Commercial Bank, Bank WestLB Vostok, Erste Bank, Export Development Canada (EDC), National Savings and Commercial Bank (OTP Bank) and Piraeus Bank, London branch, all came in as co-arrangers.

The presence of EDC, the Canadian export credit agency, as a co-arranger reflected the fact proceeds from the facility will be used to finance the import and export of gas equipment and technology, including a sizeable Canadian export transaction.

“It was certainly nice – if quite unusual – to see an export credit agency in the transaction,” says Dobson. “On isolated cases this is possible and it certainly helps when an institution of such quality joins the syndicate.”