Belarus plans first dollar bond since 2011 with $1 billion sale

The former Soviet republic has $2.2 billion of foreign debt coming due in 2015, Maksim Ermolovich, the deputy finance minister, said at a conference in London today. The yield on the government's $1 billion of notes due in August 2015 has increased 10 basis points this week to 5.81 percent at 4:47 p.m. in Minsk, compared with a 2014 high of 10.63 percent in March. "Belarus will come out to the international financial market in 2015 with a new Eurobond, we are working quite actively on it," Ermolovich said. "This is not some urgent necessity to borrow. It is primarily because Belarus has to stay an active participant of the market." The bond-sale plan comes as eastern European sovereigns outside of Russia step up debt issuance to take advantage of lower borrowing costs. Kazakhstan sold $2.5 billion of 10- and 30-year bonds in October in its first dollar-denominated offering abroad since 2000, while Slovenia, Lithuania and Romania issued euro-denominated securities last month. Belarus last offered dollar bonds in January 2011, when it raised $800 million in the sale of notes due in 2018 with an 8.95 percent coupon, according to data compiled by Bloomberg. Repaying Debt The country exports oil products, such as gasoline, it produces from Russian crude, making it world's3rd most oil-dependent economy after Libya and Singapore, according to Bloomberg estimates. An agreement with Russia that will allow Belarus to direct proceeds from export duties levied on these products to its budget from 2015 will yield an additional $2 billion to $2.3 billion of revenue, Ermolovich said. The budget surplus will swell to 1.8 percent of gross domestic product in 2015 from 0.8 percent as of Oct. 1, he said. This extra cash will go toward repaying state debt to foreign investors, including to the International Monetary Fund and Russia, he said. Belarus, ruled for more than 20 years by President Aleksandr Lukashenko, received $3.5 billion from the Washington-based IMF in 2009. A Russian-led $3 billion bailout in 2011 helped the country emerge from a balance-of-payments crisis, with the government also ceding ownership of its gas-pipeline network to OAO Gazprom. The Belarusian ruble has fallen 11 percent against the dollar this year. "Today the situation with foreign debt looks quite comfortable," Ermolovich said. "The level is low. The average rate at which we borrowed is about 4.6 percent. It is a very comfortable situation for us."