THE CITY of Moscow adopted a safety first approach this week, setting its debut Eurolira transaction this week at Lit400bn, in the middle of the Lit300bn-Lit500bn indicative issue size range. The city and its lead manager Chase Manhattan had to face up to the twin challenges of a jittery emerging market debt sector and competition from the Russian Federation's recent maiden lira Eurobond. With a 9.875% coupon -- at the midpoint of the pre-launch 9.75%-10% coupon range -- the Ba3/BB- rated Moscow issue was priced on Tuesday to yield 10.02% or 525bp over three year lira swaps at a fixed re-offer price of 99.64 -- at the top of the 500bp-525bp indicative spread range. That represented a 70bp-pick-up over the similarly rated Russian Federation's Lit750bn 9% five year issue, which was trading at 455bp over lira swaps at the time, from 435bp at launch at the end of April.
May 08, 1998