RIGA - Parex Bank tapped international capital markets again last week, issuing a 100 million euro bond issue that was snapped up by European investors. The three-year bonds, which had a 4.375 percent annual interest rate, will be listed on the London Stock Exchange.
Parex Bank, Latvia's second largest by assets, said in a statement that the bonds were bought by institutional and private investors from Germany, Austria, France, Switzerland and other European countries.
The road show for the offering took place two months ago, but the actual placement had been postponed due to unfavorable conditions on international bond markets. Once prices for debt picked up, Parex proceeded with its offering.
"The successful Eurobond issue and the high degree of interest it received from investors demonstrates international recognition of Parex's strengths," said bank president Valery Kargin. "On a more practical side the Eurobond launch diversifies our funding base and provides access to new sources of funds."
Fitch Ratings gave the issue a BB+ rating.
Parex has been an active borrower on international markets over the past two years, particularly via syndicated loans. But last week's three-year eurobond was a watershed for both the bank and Latvia's banking industry, as it represents a significant extension of borrowing terms and increased trust in Latvia's banking system overall despite recent allegations of money laundering problems.
Meanwhile, it was also reported that Valery Kargin and Viktor Krasovitsky, Parex's controlling owners, will increase their stakes in Parex Apdrosinasanas Kompanija, a non-life insurance company, to 50 percent each.
Until recently Kargin and Krasovitsky owned a 24.74 percent stake each in Parex AK, while the U.S.-registered Cresta Finance owned a 50.52 percent stake.
Latvia's Finance and Capital Markets Commission did not raise any objections against the plan on June 3.
In the first four months of this year, Parex AK subscribed 4 million lats (5.7 million euros) in gross premiums, or 8.9 percent of the total non-life gross premiums in Latvia. The company also paid 1.6 million lats in claims over the four-month period, or 7.9 percent of total claims in the industry.
According to data of the Latvian Insurers Association, Parex AK was the fifth largest among Latvia's 12 insurance companies in terms of premiums in the first four months of 2005. The company is planning to increase gross premium subscription by 42 percent this year, chairman Aivars Veiss said last week. He said the company would accomplish this by selling policies through brokerage companies and by expanding its branch network. Last year Parex AK subscribed 9.7 million lats in gross premiums.
