The first ever Russian rouble-denominated export credit facility closed finance in September last year. The Rb2.1bn transaction is supported by Swedish export credit agency (ECA) EKN and crucially is structured without EKN’s standard crystallisation clause.

HSBC is the sole mandated lead arranger on the transaction. The lack of a crystallisation clause means that the deal is structured without the standard requirement for outstanding local currency debt to be converted to hard currency in the event of non-fulfilment of obligations by the borrower.

“Obtaining EKN’s consent to this was key to the transaction as a crystallisation clause would have made the financing unattractive to VimpelCom,” says Christine Lipton, associate director, export finance, at HSBC. “HSBC presented a comprehensive package of information to EKN including an in-depth analysis of the rouble and potential hedging solutions which successfully convinced EKN to support the transaction on the basis requested. This is the first time that EKN has agreed to waive the crystallisation clause.”

The finance raised is for the supply of telecoms equipment and services by Ericsson of Sweden to VimpelCom, one of the leading mobile telecoms companies in Russia.

The transaction was originated by HSBC through its close corporate relationships with both Ericsson and VimpelCom.

HSBC is taking 5% clean risk as EKN provided a guarantee for 95% of principal plus interest in respect of both commercial risk and political risks for the full life of the facility. The guarantee is denominated in roubles.

Many Russian banks and corporates have discussed the possibility of rouble-denominated export credit facilities over the past few years but, for various reasons claims HSBC, none have been concluded until this deal.

The success of the transaction was a combination of (i) the structure developed by the lender, (ii) a high-quality borrower with a strong rouble-denominated cashflow, (iii) a supportive and flexible ECA, (iv) a supportive exporter and (v) significant improvements in the convertibility and liquidity of the rouble.

“The transaction was structured such that EKN was able to reduce its premium in respect of political risk compared to a non-local currency transaction due to the fact that it is not taking transfer and convertibility risk,” adds Lipton.

HSBC’s project and export finance department worked closely with HSBC’s treasury functions in Moscow and London to structure the facility in accordance with Russian regulations on single borrower limits and governing law as well as EKN’s requirement for a local bank to participate in the financing.

The facility was concluded in just over four months from award of mandate to full drawdown.

The tenor is seven years from the date of delivery of the equipment and services, while repayments of principal will be effected by 14 equal semi-annual instalments, the first occurring six months after the date of mean delivery of the equipment and services.

The floating interest rate comprises a margin over Mosprime.

Deal Information:




OJSC Vimpel Communications
Amount: Rb2.1bn
Sole MLA and lender: HSBC Bank
ECA: Exportkreditnímnden (EKN)
Law firms: Denton Wilde Sapte, UK and Russia
Tenor: 7 years
Date signed: September 2007