Forum Bank makes debut Eurobond issue for USD $100 mln

Forum Bank’s (FORM: BUY) three-year LPNs (loan participation notes) have an annual rate of 10% with a semiannual coupon. The bank attracted investors from Europe, the U.S. and Asia. Alexander Viktorov: Given the bank’s debut placement and the high interest rate environment (the average LIBOR increased to 5.37% in 9M06 from 4.1% in 2004), Forum’s placement can be considered successful. The 10% annual rate implies a spread of only 4.65% over average LIBOR for October. Earlier this year the bank attracted a $60 mln syndicated loan, which together with this Eurobond issue, is almost exactly in line with our forecasts for the bank’s foreign borrowing this year. The current market price warrants a 20% upside to our target. We technically upgrade the stock to BUY. See our note later today.