The expert assessed the bond russification as a win-win scenario for the investor and the bank

The rublification of subordinated bonds offered by VTB to investors can be implemented only before July 1 this year, and only with the consent of 75% of their owners, said Mikhail Doronkin, managing Director of the NKR rating agency.

VTB has offered its investors to convert some of its foreign currency subordinated bonds into ruble-denominated ones. Their face value will be converted at the exchange rate of the Bank of Russia. A new ruble coupon rate will also be set — floating with reference to the key rate of the Bank of Russia and an additional premium of 5%, currently it is 26% per annum.

"Accordingly, there are two key issues that we see: the first is the approval of the conditions by the regulator, the second is the vote with the fulfillment of the 75+% majority criterion, which may not be fulfilled for all issues, but most likely for the majority, given the rather attractive rate level even in comparison with the current ruble subordinates," — Doronkin noted.

At the same time, the expert continued, both under the scenario of maintaining a high "key" for a long time, and with monetary policy easing and, consequently, lowering the rate, the ruble-denominated VTB subordinates will still have higher yields than the old bond issues. This is a win-win scenario for both investors and the bank, Doronkin emphasized.

VTB noted that reducing the volatility of the impact of the currency factor on capital is a very important point. "We would never have done this ourselves if it weren't for the new regulation. ORP began to take into account capital instruments. That is, in fact, without this action, we will not be able to enter the standard ORP standards. The second aspect is that the ruble is not a Swiss franc, it can easily go both ways for 10 rubles per month. Therefore, the second thing is to combat the currency volatility of capital," Dmitry Pyanov, first deputy chairman of VTB, said earlier.