Made the grade

Author: | Published: 1 Aug 2007

In Russia's emerging market a few years ago, an investment-grade rating for any corporate issuer seemed unattainable, and a variety of covenants were used to mitigate credit concerns and risk perceptions. Now the market has shifted. Investment-grade corporates claim the right to debt terms and conditions no more onerous than those for western issuers, and a growing number of emerging companies financing in the international capital markets are using techniques adapted from high-yield debt in western Europe and north America.

The old Russia Investors became cautious in the debt capital markets after Russia's financial crisis in August 1998, and Russians issued few international offerings of debt securities in the following few years. But in 2000, the macroeconomic picture in Russia began to improve and some of the larger corporates, especially those in energy, returned to the Eurobond market. Gazprom, Lukoil, Sibneft and TNK all made sizeable deals. But rating agencies and...