The policy of easing monetary policy, confirmed recently by the European Central Bank, made us pay attention to the securities denominated in euros. In particular, the segment of "eternal" Eurobonds, offering the highest levels of profitability. Note that the "eternal" paper in the euro emit not only banks, but also companies in the real sector of the economy.
For example, the Volkswagen AG concern has a whole line of "eternal" issues, among which we highlight the Eurobond, placed in June last year with a coupon of 4.625% (the issuer has another "eternal" issue with the same coupon, placed in 2014). Issue in the amount of 1.5 billion euros was placed on 20.06.2018. The nearest call option on paper is provided for 06/27/2028 at face value (further calls will follow each year). Please note that the minimum lot for production is 100 thousand euros.
In our opinion, VW 4 ⅝ PERP (new) looks interesting against the background of "eternal" Eurobonds with an "investment" rating.
The “window” of primary offerings that has opened since the beginning of 2019 has recently been taken advantage of by the domestic Ministry of Finance, which placed the dollar issue with maturity in 2035 with a coupon of 5.1% per annum. Although it is traded with a small premium in yield to the sovereign curve, we consider the most “old” issue (placed back in 1998) to be redeemed in June 2028 as a more interesting investment in the line of Russian government loans. For this much shorter issue (with a duration of just over 6 years), we can now fix the dollar yield at 4.6%. A distinctive feature of the RUS-28 issue is the minimum lot of $ 10 thousand (versus the usual volume for Russian Eurobonds at $ 200 thousand). Note also the very high coupon rate - 12.75% per annum.
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