Belarus to Add to 8.75 Percent Dollar Bonds Due 2015

By Caroline Hyde and Sonja Cheung

Aug. 9 (Bloomberg) -- Belarus, the former Soviet republic, is offering to sell more of its 8.75 percent dollar bonds due 2015, according to three people with knowledge of the sale.

The new notes may be priced to yield about 8.312 percent, said the people, who declined to be identified because the sale isn't completed. That compares with 9 percent when Belarus initially raised $600 million last month, according to data compiled by Bloomberg. Those notes currently yield 8.19 percent, generic prices on Bloomberg show.

"The original Belarus deal went beautifully and this tap is offering enough premium to interest new investors to come into the deal and for those already holding the notes to top up," said Norval Loftus, chief investment officer of Allegra Asset Management in London, who said he doesn't own the 8.75 percent bonds but wants to buy the new notes.

Belarus, which separates Russia from the European Union's Baltic region, agreed a $3.5 billion 15-month standby loan with the International Monetary Fund last year after export revenue slumped. The government of Aleksandr Lukashenko pledged to sell assets and boost investments from abroad to wean itself off assistance programs.

BNP Paribas SA, Deutsche Bank AG, Royal Bank of Scotland Group Plc and OAO Sberbank, which managed the original sale, are also arranging the tap, the people said. The notes are rated B+ by Standard & Poor's, four steps below investment-grade, and an equivalent B1 by Moody's Investors Service.

"An increase in the size of the notes outstanding should improve liquidity, adding one important element for the bonds to continue to trade well on the secondary market," Loftus said.

-- Editors: Andrew Reierson, Michael Shanahan


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