Everscale Partner
INVESTMENT IDEAS
Today we will look at two debt securities as investment ideas for this week Kinross Gold Corporation and Russian Railways
IDEA #1: Kinross Gold Corporation
In the segment of issues with a yield of at least 5.5%, let us pay attention to one of the Eurobonds of the Canadian gold mining company Kinross Gold Corporation. The issuer is engaged in gold exploration and mining around the world: in the USA, Brazil, Chile, Mauritania, Ghana and in Russia. Proved and probable reserves include 34.4 million ounces of gold, 44.0 million ounces of silver and 1.4 billion pounds of copper. The headquarters is located in Toronto. The company’s branches employ 7 thousand people. The issuer’s shares are traded on the Toronto Stock Exchange with a current market capitalization of $ 5.4 billion. S&P and Fitch agencies hold the issuer and its liabilities with an investment rating (BBB-), while Moody’s is one step lower. However, last month Moody’s raised its outlook on the issuer to “positive”.
The senior unsecured issue of Kinross Gold Corporation maturing in 2041 in the amount of $ 250 million was placed in May 2012. The issue market is global. Six months before maturity on paper, a call option at face value is provided. Options to review the coupon level are not provided. The minimum lot on paper is 2 thousand US dollars. Note that the paper is serviced by NSD.
IDEA #2: Russian Railways
Last week, Russian Railways announced that it would redeem all three-issue bonds offered under the offer, including a British pound-denominated Eurobonds maturing in 2031. The paper will be redeemed at a price of 134.5% of the face value, the repurchase amount is 22.6 million pounds. sterling. The liquidity of the Eurobond as a result of the repurchase should not be badly affected – securities worth 627 million pounds remain in circulation.
This issue in 2019 is one of the leaders in price growth among all Russian foreign currency bonds, having risen in price by almost 15 figures since the beginning of the year. Such an impressive dynamics is associated both with a drop in interest rates in pounds, and with a relatively high duration of the paper. However, even after such rapid growth, the Russian Railways Eurobond is trading at the highest yield among senior securities with an investment rating from international issuers.
Alexey Shternshis
Joint Managing Director
Capital Pi
https://capitalpi.fund/191203
