Market News Company News SECURITIES MARKET

SSEECCUURRIIITTIIIEESS MMAARRKKEETT NNEEWWSSLLEETTTTEERR weekly

Presented by: VTB Bank, Custody

August 26, 2021 Issue No. 2021/32

Market News

Finance Ministry sells RUB 170 bln of OFZ bonds On August 25, 2021 Russia’s Finance Ministry placed RUB 106.909 bln of OFZ government bonds at two auctions. At the first auction, the ministry placed RUB 57.659 bln of OFZ 26237 government bonds with a fixed coupon maturing in March 2029. The cut-off price amounted to 98.3095% and the weighted average price stood at 98.3506%. The cut-off yield and the weighted average yield stood at 7.11%. Demand totaled RUB 127.859 bln. At the second auction, the ministry placed RUB 49.253 bln of OFZ 26240 bonds with a fixed coupon maturing in July 2036. The cut-off price amounted to 97.502% and the weighted average price stood at 98.599%. The cut-off yield amounted to 7.4% and the weighted average yield to 7.39%. Demand totaled RUB 57.452 bln.

Company News

MTS has no buyback plans till end of 2021 On August 19, 2021 Vice President for Finance of Russian mobile operator MTS Andrei Kamensky said at a conference call that the operator plans no new buybacks till the end of 2021. In July, MTS completed the buyback program it started on March 31 and purchased over 45.4 mln ordinary shares in total for about RUB 15 bln.

Metalloinvest may hold IPO in 2022 valued at USD 20 bln On August 20, 2021 it was reported that Metalloinvest is considering an initial public offering (IPO) in 2022 which hopes to be valued at USD 20 bln. CEO Nazim Efendiyev told reporters that the IPO decision had not been made. He added that the company, which is already Russia’s top producer of hot-bricketed iron, plans two more projects in central Russia, which would double the output to 9 mln tonnes. Metalloinvest plans to boost annual investment to at least USD 1 bln.

MTS can spin off tower and digital assets until early 2022 On August 20, 2021 President of Major Russian mobile operator MTS Vyacheslav Nikolayev said during a conference call that MTS would spin its tower and digital assets off until early 2022. After consulting the board of directors, the company’s management proposed restructuring, as a result of which the board would receive a proposal to spin off the operator’s tower and digital assets into separate firms controlled by MTS. If the extraordinary general meeting of the shareholders, which will take place on September 30, approves the initiative, the process of legal separation of the assets will hopefully be completed in early 2022. Nikolaev said that MTS would act depending on market situation. He added referring to the towers that the market had reached the point of equilibrium in covering the territory, and there are signals that other players can consider consolidation. The fixed-line networks, data processing centers, and the cloud business of the operator will be in the hands of a 100%-owned subsidiary of MTS, which will start functioning in early 2022. Nikolayev also mentioned that MTS plans to bring its retail business to a break-even point until the end of 2022. The company’s goal is to ensure a good margin of the division in the long-term.

Samolet sets final RUB 10 bln bond guidance at 9.15% On August 20, 2021 it was reported that Russian real estate developer Samolet Group had set the final coupon guidance for RUB 10 bln of 3-year exchange bonds at 9.15%. The issue carries quarterly coupons, and the technical placement was preliminary scheduled for August 25. Alfa-Bank, VTB Capital, Gazprombank, Credit Bank of Moscow, SberCIB, and Sovcombank act as the organizers of the placement.

Novatek to discuss H1 2021 dividends on August 27 On August 20, 2021 it was stated that Novatek’s board of directors would consider recommendations on dividends for January-June 2021 and the payment procedure on August 27 during a board meeting. The board of directors will also discuss a possible extraordinary shareholders’ meeting.

Norilsk Nickel shareholders approve capital cut by RUB 4.6 mln On August 20, 2021 it was stated that the shareholders of Russian metals giant Norilsk Nickel had approved reducing the issued capital by RUB 4.59 mln to RUB 153.655 mln by cancellation of common shares. In June, Norilsk Nickel bought back 5.382 mln common shares.

Raspadskaya management sees dividends above 100% of FCF unreasonable On August 20, 2021 Director for Finance and Economy of Russia’s Raspadskaya, the company that unites coal assets of metals and mining giant Evraz, Stanislav Kuznetsov said in a conference call that the management of the company thinks that it is unreasonable to pay dividends of more than 100% of free cash flow (FCF). Earlier in the day, the company said in a statement that it planned to pay at least 100% of FCF in dividends twice a year in accordance with the financial report calculated under International Financial Reporting Standards (IFRS) if the ratio of net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) is below 1x. If the ratio is above 1x, then dividends should amount to no less than 50% of FCF. When asked whether the company would pay more than 100% of FCF in dividends, Kuznetsov said that the dividend policy that the management had recommended for approval was very positive. The dividend yield there stands at 9%, it is very high. But the company should also have some funds left for current operations. Moreover, some increase of capital expenditures awaits Raspadskaya in the future, including spending on environmental projects. He added that the sector is also rather risky, so additional distribution of dividends might be considered unreasonable. Evraz controls 90.9% in Raspadskaya.

Gazprom shares rise to RUB 300 per share first time in 13 years On August 24, 2021 it was disclosed that Russian gas giant Gazprom’s shares had reached their highest price in 13 years in anticipation of the launch of Nord Stream 2 natural gas pipeline, climbing above RUB 300. As of 10:21, Moscow time, the shares of Gazprom grew by 0.85% up to RUB 300.23, the MOEX index rose by 0.49%. The previous historical maximum for the gas company was reached in 2008 at RUB 369.5. At the then dollar exchange rate, this corresponded to the market capitalization of the company at the level of USD 370 bln. Now this figure is about USD 95.9 bln.

Samolet Group plans to issue additional shares On August 24, 2021 it was stated that Russian real estate developer Samolet Group plans to increase its shareholder equity through an issue of additional shares. The company’s shareholders are to submit voting ballots until September 28.

President’s envoy Novikov can join boards of directors of Rambler and Okko On August 24, 2021 it was reported according to President Vladimir Putin’s decree released on the official portal of legal information that Chief of the Russian Presidential Directorate for Social Projects Sergei Novikov can join the boards of directors of Rambler Internet Holding and online cinema Okko. Rambler Internet Holding and Okko are both parts of group SberEntertainment, which unites entertainment assets of ecosystem Sber.

TransFin-M sets final guidance for RUB 6 bln of 10-year bond at 9.8% On August 25, 2021 it was reported that Russian leasing company TransFin-M had set the final coupon guidance for RUB 6 bln of 10-year exchange bonds at 9.8%, which corresponds to a 10.17% annual yield to a 3-year buyback offer. The offering during pre-marketing amounted to RUB 5.5 bln. The technical placement is preliminarily scheduled for August 30. Promsvyazbank, Credit Bank of Moscow, Sinara Investbank, Sovcombank, Expobank, Univer Capital and Veles Capital are the organizers.

TCS Group prolongs buyback program till June 30, 2022 On August 26, 2021 it was stated that the board of directors of Russia’s TCS Group, which includes Tinkoff Bank, had approved expansion of a program, launched in April and expiring on August 31, to buy back the company’s global depositary receipts (GDRs) by 1.05 mln securities that can be bought back for USD 125 mln. The program is prolonged till June 30, 2022.

Sberbank to collect bids for RUB 10 bln 3.5-year bond from August 27 to September 2 On August 26, 2021 it was reported that Russia’s top bank Sberbank plans to collect investors’ bids for at least RUB 10 bln of 3.5-year discount zero-coupon exchange bonds within the period August 27–September 2. The price guidance is 79.25% of the face value, which corresponds to a 7.5% annual yield to maturity. The technical placement is preliminarily scheduled for September 3. SberCIB is the organizer.

Lenta says closes RUB 2.45 bln acquisition of Semya store chain On August 26, 2021 it was stated that Russian grocery retailer Lenta had closed the purchase of Semya (Family), a retail chain in the city of Perm and in the Perm Region for about RUB 2.45 bln. As a result of the acquisition, which was approved by the Russian Federal Antimonopoly Service in July 2021, Lenta will have a total food retail market share of approximately 7% in the Perm region and the combined business will enhance its position as the fourth largest retailer in Perm. In mid-June, Lenta said it agreed to buy 75 stores of Semya for RUB 2.35 bln. The combined sales area of the stores stands at 46,600 square meters.

Dividends Qiwi’s board of directors approves April–June dividend of USD 0.30 per share On August 19, 2021 it was stated that the board of directors of Russian online payment service operator Qiwi had approved an April–June dividend of USD 0.30 per share against USD 0.33 paid for the same quarter of 2020. In accordance with the decision of the board of directors, the company aims to distribute at least 50% of group adjusted net profit for 2021. The dividend record date is scheduled on September 7, and Qiwi will make the payments on September 9. The holders of the company’s American depositary shares will get the dividend shortly thereafter.

Novorossiysk Grain Plant may pay RUB 9.5 per share in January–June dividends On August 20, 2021 it was stated that the board of directors of Russia’s Novorossiysk Grain Plant had recommended paying RUB 9.5 per share in dividends for January–June. The record date for the dividends is October 11. The shareholders will consider the recommendation at an extraordinary general meeting (EGM) on September 24. According to materials of Novorossiysk Grain Plant, state-owned holding United Grain Company has a 50.9993% stake in the company, while VTB Bank’s Demetra-Holding has 35.36338%.

Raspadskaya’s board recommends paying RUB 23 per share in H1 dividends On August 20, 2021 it was disclosed that the board of directors of Russian coal producer Raspadskaya had recommended paying RUB 23 per common share in dividends for January–June. The record date is preliminarily scheduled for October 4. The company said in March 2019 that it could start paying dividends at a net debt/EBITDA (earnings before interest, taxes, depreciation and amortization) ratio of no more than 2x. The minimum annual payment would amount to USD 50 mln and is to be paid in two tranches worth at least USD 25 mln for the first half of the year and for the entire financial year. Raspadskaya is part of U.K.-based steel and mining giant Evraz, which operates mainly in Russia.

Severstal shareholders approve RUB 84.45 per share in dividends for April–June On August 23, 2021 it was stated that the shareholders of Russian steelmaker Severstal had approved paying RUB 84.45 per common share in dividends for April–June. The record date is set at September 2. Severstal paid RUB 15.44 per share, or RUB 12.93 bln, in dividends for April–June 2020. In 2021, the company paid RUB 46.77 per share, or a total of around RUB 39.18 bln in dividends for January–March.

Polyus can pay RUB 267.48 per share in dividends for January–June On August 24, 2021 it was stated that the board of directors of Russian gold producer Polyus had recommended paying RUB 267.48 per share in dividends for January–June. The record date can be scheduled for October 11. Polyus paid RUB 240.18 per share in January–June 2020 dividends and RUB 387.15 per share in final dividends for the year.

Rosneft may pay RUB 18.03 per share in dividends for January–June On August 24, 2021 it was stated that the board of directors of Russian oil major Rosneft had recommended paying RUB 18.03 per share, or a total of RUB 191 bln, in dividends for January–June. The payment will account for 50% of the consolidated net profit attributable to shareholders of Rosneft and calculated under International Financial Reporting Standards (IFRS). The record date for the dividends is October 11. The shareholders will consider the recommendation at an extraordinary general meeting (EGM) scheduled for September 30. Core owners of Rosneft are state oil and gas holding Rosneftegas with a 40.4% stake, BP Russian Investments Limited with 19.75%, QH Oil Investment LLC with 18.46%, and Rosneft subsidiaries RN-NeftKapitalInvest and RN-Capital with the stakes of 9.65% and 0.76%, respectively. The Federal State Property Management Agency owns 1 share in the company.

Polymetal may pay USD 0.45 per share in dividends for January–June On August 26, 2021 it was stated that the board of directors of Russian gold producer Polymetal International had suggested paying USD 0.45 per share in dividends for January–June, which accounts for 50% of the company’s adjusted net profit in the period. Polymetal paid USD 0.4 per share in dividends for January–June 2020.

Tatneft board recommends paying RUB 16.52 per share in January–June dividends On August 26, 2021 it was stated that the board of directors of Russian oil company Tatneft had recommended paying RUB 16.52 per share in dividends for January–June. The shareholders will consider the recommendation at an extraordinary general meeting on September 30. The record date is recommended to be set at October 12. Tatneft paid RUB 9.94 per share in dividends for January–June 2020.

Please be advised that the information presented in this newsletter is based on the following sources: National Settlement Depository (NSD); Clearstream Banking; Euroclear Bank; PRIME-TASS information agency; “Kommersant”, "Rossiyskaya Gazeta”, “Izvestiya, "Vedomosti”, “The Moscow Times“ newspapers, and others.

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