* Russia places 0.75 bln euros in 7-year Eurobonds
* Russia places 1.25 bln euros in 12-year Eurobonds
* Demand nears 2.8 bln euros
* Russia needs to plug budget holes amid COVID, weak oil prices
* Size of Eurobond issue not crucial for budget (Adds finance ministry’s comment)
By Oksana Kobzeva, Andrey Ostroukh and Tatiana Voronova
MOSCOW, Nov 12 (Reuters) - Russia raised 2 billion euros ($2.36 billion) in Eurobonds on Thursday as it tapped the global debt market for the first time this year, seeing more than 60% of bids coming from foreign investors outside the United States, the finance ministry said.
The Eurobond placement served as a reminder for investors of Russia’s presence on the global debt market after its earlier plans to issue Eurobonds were thwarted this year by the COVID-19 pandemic and increased risks of Western sanctions.
Russia, seeking additional sources to compensate for a budget shortfall caused by lower oil prices and the coronavirus crisis, placed two issues of euro-denominated Eurobonds.
It raised 750 million euros in a seven-year Eurobond with a coupon rate of 1.125% and 1.25 billion euros in a 12-year Eurobond with a coupon rate of 1.85%, said Denis Shulakov, first vice president at Gazprombank, one of the organisers of the debt placement.
Demand for the issues reached 1.2 billion euros and 1.6 billion euros, respectively, the finance ministry said.
“The issue came out at a record low rate for any currency for Russia’s public borrowing on the international market,” Shulakov said.
Russia’s Eurobonds saw demand from around 120 investors, Shulakov said. Around 40% of bids came from Russian investors, while the rest came from investors from Europe, Asia and the Middle East, Shulakov said.
“The issue is very attractive, especially if you look at relative pricing guide,” said Sergey Dergachev of Union Investment.
Demand for Russia’s sovereign issue was limited by U.S. sanctions, however.
In 2019, Washington imposed restrictions for U.S. banks on buying sovereign Eurobonds directly from Russia. But the sanctions do not restrict the buying of Russian Eurobonds on the secondary market and do not apply to other banks.
“For us, one of the main things we focus on is liquidity ... Given a big portion of investors out of the U.S. won’t be able to trade or invest, I would be concerned,” Alejandro Arevalo, fund manager with Jupiter Asset Management, said.
As of Oct. 1, foreign investors held 57.5% of Russian Eurobonds, according to the central bank.
Russia’s Eurobond issue is important but not crucial for the budget as the country has recently been borrowing heavily at home.
On Wednesday, Russia borrowed more than $4 billion in rouble treasury bonds, fulfilling the government’s fourth-quarter borrowing plan of nearly $26 billion.
($1 = 0.8474 euros)
$1 = 77.1894 roubles Additional reporting by Anton Kolodyazhnyy, Elena Fabrichnaya, Alexander Marrow and Gabrielle Tétrault-Farber in Moscow, and Karin Strohecker and Tom Arnold in London; Editing by Katya Golubkova, Larry King, Jane Merriman and Tom Brown