Far East Telecom placed a three-year bond issue worth Rub 1 billion on November 19, 2003. The issue was floated with a par value of Rub 1,000. Yields on the bond are paid out once every six months with 14.5% annual rate during the first year of circulation, 15% annual yield during the second year and 13% during the third. Secondary placement of the bond on MICEX got under way on December 29, 2003.
After only a little more than a month after circulation (end of December 2003 – January 2004) 129 deals had been transacted for a total of Rub 755,854,626.8 Moreover, a total of 732,349 bonds were sold on the secondary market, which accounts for 73% of the total volume of the issue. Of the 76 transactions executed on the open market, 42 were on a negotiated basis and 11 were REPO deals.
The average-weighted price of market transactions was 106.8% of par value, while negotiated transactions were executed at 104.6% of par value. Trade turnover stood at Rub 58.9 million for market transactions and Rub 542.9 million for negotiated transactions.
The price of Far East’s bond on the secondary market was 108% of par value as of January 2004.
Thus, investors which acquired Far East Telecom’s bond during the primary placement received 3-8% in extra profits during the two and a half months which elapsed from the time of placement, which works out to 15-38% in annualized terms. This does not count the cumulative coupon income on the bond, which was a little over 3% after two and a half months.