Yandex FinTech enters the bond market with a unique deal

Yandex’s growing fintech unit now has its own bonds. The Moscow Exchange has successfully placed bonds secured by receivables to the total of RUB7.7 billion (SFO Split Finance 1 as the issuer, and JSC Yandex Bank as the originator and servicer for the issue). The legal team providing support for the transaction was led by Vladimir Dragunov, partner and head of Capital Markets and Structured Finance at Denuo.

The transaction structure is innovative for the Russian market and creates a sustainable platform to support Yandex Bank’s dynamically growing business

Owing to the issue’s structure, designed to protect investors from potential risks to the greatest extent, and the high-quality loan portfolio used to repay the bonds, the issue has been awarded the highest reliability rating of AAA (ru.sf) by the Analytical Credit Rating Agency (ACRA).

The bond issuer (SFO Split Finance 1) is protected from external influences, and the possibility of its bankruptcy and liquidation is limited by the law and transaction documentation. Bond payments are protected from potential risks of the banking system (including the risk of “deposit freezes”). The portfolio of loans, which are carefully selected for the transaction according to more than 30 criteria, significantly exceeds the size of the bond issue, which creates an additional “credit cushion” (guarantees) for investors.

The bonds offer a unique risk/return ratio. Despite very challenging market conditions, the transaction, unsurprisingly, attracted strong investor demand. The coupon rate was 25% p.a.

We congratulate Yandex FinTech on its successful bond placement. We are sure that this transaction will inspire the bank to create new interesting financial products for its clients.

Vladimir DragunovPartner, Head of Capital Markets and Structured Finance