Alfa-Bank repays Eurobonds after crisis

Alfa-Bank, one of Russia's largest commercial banks, said yesterday it had repaid its outstanding Eurobonds, making it the country's first corporate issuer to fully honour its obligations following the financial crisis of August 1998.Alex Knaster, chief executive of Alfa, said: “This is a really important moment for us. Everyone else has defaulted. Our philosophy is that we might ask for a deferral but we never ask for debt forgiveness.”The bank fully reimbursed its three-year Dollars 175m Eurobonds, which were issued in July 1997, in spite of wide-ranging restructuring and default by other Russian banks and corporations on both Eurobonds and other financial instruments. It was helped by a relatively low exposure to federal treasury instruments (GKOs), on which the Russian government defaulted, and a Dollars 40m loan after the crisis by Arko, the state bank restructuring agency. Alfa-Bank itself was forced to restructure its Dollars 77m in US commercial debt, but has since repaid more than half of the total.In a sign of the growing confidence in the Russian economy, Mr Knaster confirmed yesterday that the bank was likely to seek fresh international finance this year ahead of a new Eurobond issue by next summer. He said Alfa was likely to seek up to Dollars 100m in syndicated loans by the end of the year as long as the interest rate did not exceed 12 per cent, and Dollars 200m in Eurobonds next year on condition that the rate was not more than 11 per cent.