The Russian bear is getting stronger

Fri, Apr 27 2007, 10:24 GMT
by Lars Rasmussen

Danske Bank A/S


The Russian bear is getting stronger

Agenda

  • Presentation of the bond
  • Presenting the Russian economy
    • Macroeconomic situation
      • Upswing firmly entrenched and the external balances are strong
    • Monetary policy
      • Exchange rate policy -managed float
      • Inflation has come under control -at least for now
    • Other factors
      • Longer-term risks -a weakening of the external balances
  • Why buy a rouble bond?
    • Low risk with a decent coupon and possible currency upside

Danske Bank issues a rouble bond:

  • Indicative terms and conditions :
    • Issuer: Danske Bank A/S.
    • Rating:Aa1 by Moody’s / AA-by Standard & Poor’s / AA-by Fitch.
    • Currency: Russian Rouble (“RUB”).
    • Nominal Amount: RUB 250,000,000.
    • Issue & Re-offer Price:100.05 %.
    • Coupon:5.50 % p.a.
    • Announcement Date:24 April 2007.
    • Settlement Date:14 May 2007.
    • Maturity Date:14 November 2008.
    • Denominations: RUB 50,000. Until the issue has been officially listed on the Copenhagen Stock Exchange (May 14), the bonds will only be sold to investors in allotments equal to or in excess of RUB 2,000,000, in order to comply with the European Prospective Directive.

Macroeconomic situation

  • High growth in recent years
  • Let’s go shopping
  • The labour market is getting tighter
  • Exports -it’s all about oil and gas
  • Strong external balances

Monetary policy

  • Is inflation trending downwards?
  • Currency is pegged against a USD/EUR basket
  • Rouble forecast

Other factors

  • Risk factors
  • Good reasons to buy a short rouble bond

Published on  Fri, Apr 27 2007, 10:33 GMT

Danske Bank  | Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com

Legal disclaimer and risk disclosure

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

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