European banks favored to manage Russian Eurobond: finance minister

By Darya Korsunskaya

MOSCOW (Reuters) - European banks have greater chances than U.S. ones of being among the organizers of a Russian sovereign Eurobond issue this year, Russian Finance Minister Anton Siluanov said on Tuesday.

Russia has invited 25 Western and three domestic banks to bid to organize up to $3 billion in Eurobonds this year, in what would be its first foray into foreign debt markets since 2013.

"First of all (it could be) European banks," Siluanov told journalists. "This is because of the position of the American authorities."

The U.S. government has warned some banks that bidding for the deal would undermine international sanctions imposed on Moscow for its role in the Ukraine conflict in 2014, The Wall Street Journal reported.

Banking sources told Reuters that German bank Deutsche Bank had responded to the Russian Finance Ministry's invitation to express its interest.

Sources also said U.S. banks Citi (NYSE: C) and Bank of America Merrill Lynch (NYSE: BAC) had not responded to the invitation to organize the Eurobond.

Deutsche was one of the organizers of Russia's last sovereign Eurobond. Deutsche, Citi and Bank of America all declined comment.

The list of invited banks also includes foreign banks J.P. Morgan, Morgan Stanley and Barclays, as well as local banks Sberbank CIB, VTB Capital and Gazprombank, according to a letter published on the ministry's website.

Russia will pick organizers of the Eurobond issue this month, Interfax news agency cited Konstantin Vyshkovsky, the head of the Finance Ministry's sovereign debt department, as saying on Tuesday.

Deputy Finance Minister Sergei Storchak said last week that many of the invitees had not responded, but the ministry nonetheless would have a pool of banks to choose from.

Business daily RBC reported on Tuesday that Goldman Sachs had initially responded positively to the invitation but was now looking to withdraw its application. A Russian representative of Goldman Sachs declined to comment.

Concerns that the proceeds of any Russian government bond issue would flow to state-run companies under Western sanctions have meant many portfolio managers have been consulting compliance officers and legal experts for advice on whether to invest in the debt.

Sergio Trigo Paz, head of emerging debt at BlackRock, said he was very positive on Russian debt. He said he was considering buying the new Eurobonds.

Asked whether compliance was an issue he said: "That's why we are considering it".

(Additional reporting by Alexander Winning, Elena Fabrichnaya and Lidia Kelly in Moscow and Sujata Rao in London; Writing by Lidia Kelly; Editing by Ralph Boulton)

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