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Vtb refinancing loan attracts support despite russian sanctions

´╗┐Lenders are expected to submit their credit approved commitments to Russian state-owned bank VTB's refinancing loan by the end of next week, providing a positive sign that the syndicated loan market is still accessible for some Russian borrowers, banking sources said. The international loan market has in effect been on hold in Russia since the annexation of Crimea in March, but at the beginning of June, VTB decided to ask banks to provide a one-year facility of between $1.0 billion-$1.5 billion to refinance a $3.13 billion three-year facility that is scheduled to mature on July 7. Those lenders have since been evaluating how much appetite they have for the deal with mixed results."VTB has asked for commitments of $150 million from each bank but it may not pan out like that," a banker said. "It could well end up as a mixed group on different tickets."Overall appetite has been positive, and bankers close to the deal expect VTB to raise as much as $1.5 billion altogether. The deal is a one-year facility rather the usual three-year maturity to try and assuage lenders' fears after EU and US sanctions were issued against Russia."It shouldn't be a challenge to get the number VTB has requested," said a second banker. Another measure introduced by the borrower to help facilitate the credit approval process saw VTB give permission to banks to discuss the deal with each other prior to approaching their credit committees for final approvals.

"There will be a telephone call between the banks, with the borrower's permission, before we approach credit committees for final approval," said the second banker. "This will give us an idea of what other banks are doing so we can build an informed liquidity profile of the deal and appease the committees with the knowledge that you are not alone in this deal."Nevertheless, some bankers remain sceptical around the feasibility of US banks' ability to join a Russian deal at this stage."US banks will find it very hard to get credit approval for this deal," said the first banker. "It is still too early for US banks to move back into the Russian market, especially for an entity which is state backed. I wouldn't be surprised if we see some Japanese banks in there though."VTB declined to comment.

DIY LOAN The loan is being self-arranged by VTB, which is expected to give all the participating banks the same bookrunner and mandated lead arranger title, the bankers said.

"My sense is that a technical co-ordinator might be mandated but VTB won't want to give any particular bank the upper hand (in the deal) and risk other banks walking away," the second banker said. Pricing has not increased significantly from the 2011 deal it replaces. The new deal is carries all-in pricing of at 175 basis points (bps), compared to a margin of 130 bps on the longer-dated 2011 loan."I am not surprised by the pricing, there are enough banks interested in the deal to justify it," a third banker said. If ultimately VTB does fail to raise at least $1 billion from banks, it could walk away from the deal."My sense is if VTB can't raise at least $1 billion I think they would prefer not to do anything. It needs to be seen to able to raise a substantial facility otherwise it looks weak," the second banker said. The original July 2011 facility for Russia's second biggest lender was the largest-ever loan for a financial institution in Central and Eastern Europe at the time and refinanced an existing 2008 $1.4 billion loan. The 2011 deal was coordinated by ING and SMBC.

Wall Street slips ahead of Yellens speech

´╗┐The S&P 500 and the Dow were set for their first back-to-back losses since late-January on Friday, as investors preferred to wait and watch Federal Reserve Chair Janet Yellen's speech for a steer on the chances of an interest rate hike this month. Yellen could support a rising sentiment among policymakers for an increase in rates amid data pointing to an improving U.S. economy. She is set to speak at 1:00 p.m. ET (1800 GMT). Also scheduled to speak is Fed Vice Chairman Stanley Fischer at 12:30 p.m. ET. Traders have priced in a 75 percent chance of a rate hike when the Fed's policy-setting body meets on March 14-15. The odds stood at roughly 30 percent at the start of the week, according to Thomson Reuters data. Investors are also assessing their positions following a strong rally on Wednesday, after President Donald Trump's pro-growth speech to Congress and a rise in bank stocks sparked a record day on Wall Street. "I think we are at a position where we have the ability to move up a little bit higher (on rates)," said Paul Springmeyer, investment managing director at the Private Client Reserve at U.S. Bank in Minneapolis, Minnesota.

"But the difficulty is that we have a lot of other levers that are currently in flux, from a policy standpoint, and their potential impact on the equity markets." The S&P 500 is already up 6.3 percent so far this year, compared with the 9.5 percent it gained in 2016, triggering worries over valuation. At 11:02 a.m. ET (1602 GMT), the Dow Jones Industrial Average was down 44.89 points, or 0.21 percent, at 20,958.08, the S&P 500 was down 5.63 points, or 0.23 percent, at 2,376.29 and the Nasdaq Composite was down 14.29 points, or 0.24 percent, at 5,846.93.

Nine of the 11 major S&P sectors were lower, with high-dividend yielding utilities and real estate the biggest losers. Financials, which benefit from higher rates, rose 0.39 percent, while a rise in oil prices propped up the energy sector. Costco was the top drag on the S&P and the Nasdaq, falling 4 percent after its quarterly sales and profit missed analysts' expectations.

Winton CEO defends firm from Buffett criticism of fees, returns LONDON/NEW YORK David Harding, founder of one of the world's biggest hedge funds, on Friday defended his firm against Warren Buffett's criticism of hedge fund fees last week.

PSA reaches deal to buy Opel from GM, wins board approval: source PARIS French carmaker PSA Group reached an agreement with General Motors to buy the U.S. carmaker's loss-making Opel division and won the support of its own board for the deal on Friday, a source familiar with the matter told Reuters.

Caterpillar shares rise as import practices scrutinized Caterpillar Inc's shares gained on Friday, the day after U.S. law enforcement officials raided three of the company's Illinois facilities, as the Trump administration promised stricter scrutiny of multinationals' import and export practices.

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