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Credit Bank of Moscow tweaks tender offers after bonds hit by market volatility

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Credit Bank of Moscow tweaks tender offers after bonds hit by market volatility

PAO Credit Bank of Moscow decided to decrease the amount of tender offers for $600 million participation notes due in 2027 and for $700 million perpetual notes to $50 million, citing current volatility in the Russian financial markets.

Market prices of the tendered notes have fallen by over 10% due to the market volatility, but the lender decided to fulfill investors' orders at the previously announced price, while lowering the value of the tender. The liquidity that the bank initially planned to use for the buyback will be applied to maintain its debt instruments in the market, the lender's management board head, Vladimir Chubar, said.

The bank also decided to extend the expiration date of the offers to Aug. 24 from Aug. 10, with bondholders having the right to withdraw tendered notes until Aug. 14.

The previously announced tender offer price range remains unchanged, and amounts from $860 to $910 per $1,000 in principal amount of notes of both issues. The notes tendered at or prior to the original tender expiration date and not validly withdrawn will be accepted for purchase before notes tendered after the date.

The notes subject to the tender were issued in 2017 by CBOM Finance PLC for the purposes of financing subordinated loans for Credit Bank of Moscow. The tender offers were launched July 16 in order to decrease the bank's cost of capital, optimize its capital structure and provide liquidity to bondholders. The value of the maximum tender amount was initially set at $100.0 million, but the lender decided to increase it to roughly $142.8 million on July 27.

The Russian financial market came under pressure following news reports indicating that a sanctions bill proposed by a group of U.S. senators earlier in August could also target several Russian state banks.

In addition, the U.S. also announced Aug. 8 plans to impose fresh sanctions against Russia later this month over the poisoning of Russian agent Sergei Skripal, further deepening the selloff of Russian assets initiated by the earlier sanctions reports.