'Turbulence' forces Russian bank to pull bond offer
Russia's state development bank VEB said on Thursday it had shelved a bond offering due to market turbulence, amid reports investors took fright due to post-election protests in Moscow.
"VEB has decided to postpone the eurobond issue, because of the turbulence in the financial market and will come back once the market stabilises," the bank said in a statement.
The statement did not give further details but the Kommersant daily said investors were spooked by a steep fall on the Moscow stock markets on Tuesday that was sparked by the unusually large protests.
The book building for the $500-million (370-million-euro), five-year eurobond offer -- indicating investor interest before the actual bids come -- had been very strong, a banking source told the paper.
"The book building was basically done but then investors decided not to take part due to the disturbances in Moscow," the source said.
"Two hours before the start of taking bids for the offer, the book was already filled to a volume of $1 billion. But then after hearing about the turbulence on the markets, investors started to withdraw their bids."
Kommersant said this was the first time since the turbulent 1990s -- when Russia defaulted on its debt and the economy almost went into meltdown -- that a political event had forced the cancellation of a Russian eurobond offer.
The Russian stock markets, which usually closely track US trends, fell sharply on Tuesday after the first demonstrations. The MICEX index dropped almost 4 percent and the RTS almost 5 percent. They extended the losses on Wednesday but were moderately recovering Thursday.
Another source told the paper that foreign investors in particular had pulled out after hearing that US Secretary of State Hillary Clinton had vehemently criticised the conduct of the elections.
The opposition, which insists the vote was rigged, have staged daily protests in Moscow since Monday and have vowed an even bigger rally at the weekend.
© 2011 AFP