By Rustam Botahev, Senior Analyst at Unicredit Securities
Bank Saint Petersburg plans to raise $200m in a placement of convertible preferred shares, Bloomberg reports. The announced price range for the issue is $3.1-3.6, which implies a premium of 3%-19% to the Monday’s (the day before the announcement) closing price on MICEX of RUB 86.79 ( 3.015).
The preferences are eligible for the annual dividend worth the RUB equivalent of 13.5% of the placement price; they are to be converted into common shares in May 2013.
The bank also plans to convert some $50-100m of its subordinated debt into preferences. The pricing is to take place on 30 November.
Our view: The dividend yield for the preferences (13.5%) is close to the yield of Promsvyazbank’s 4.5-year subordinated bonds placed last week (12.75%). While Promsvyazbank is not public, we believe it deserves a lower yield thanks to its size and the presence of Commerzbank and EBRD as large minority shareholders.
Assuming four dividend payments (in 2010, 2011, 2012, 2013) and 1:1 conversion into commons in May 2013, the bank is actually placing the preferences with a 30%-50% discount to common shares, which is in line with the historical spread between Sberbank’s commons and preferences.
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