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EBRD back in demand as banks seek security

  • 01 May 1998
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WITH central and European credit risks at their highest for 18 months, loan syndication teams in commercial and investment banks are looking for more support and security.

One way they can achieve this is through co-financing with the EBRD. Co-financing is one of the development bank's most important objectives, and it is through its agribusiness department that many of these objectives are being fulfilled.

Dedicated to financing projects in the agriculture, food, beverage and horticulture sectors, the department has helped finance 86 projects totalling Ecu1.4bn through limited recourse debt and various types of equity structures since its creation in 1991.

One of the group's more recent financings, a loan to ZAO Dirol, is a typical example of how the department can bring private bank's loan business to hitherto untested sectors.

The loan totals DM100m and will be used by ZAO Dirol, a joint stock company owned by Danish Tyggegummi Fabrik A/S - the largest European chewing company manufacturer - and the Danish Investment Fund for Central and Eastern Europe (IØ Fund).

The financing consists of an EBRD provided DM60m 'A' loan and a DM40m 'B' loan, which has been provided by Rabobank Nederland, Den Danske Bank and Bikuben Girobank.

ZAO Dirol is providing DM59m in equity and the IØ Fund is providing DM17m. Proceeds are being used to finance the construction of a chewing gum production plant in Novograd, Russia.

All participants agree that, without the EBRD's involvement, they would not have touched the deal. "The EBRD is back in demand as a result of the Asia crisis," says one banker. "Banks now require more security, and the EBRD is one way they can get it. There is no way we would have participated in the Dirol deal if the EBRD was not providing its 'A' and 'B' loan structure."

More projects are on the horizon - including a co-financed credit facility which will finance AO Vena, one of St Petersburg's leading breweries. The EBRD is looking to bring in a selected group of commercial banks to the deal.

"It is one of our most important challenges to involve commercial banks in our deals," says a spokesman for the department.

"Syndication is an excellent discipline. It keeps our pricing competitive, which is good for us but, more importantly, it is beneficial to the borrower - be it international or local.

"We are here to be the catalyst for the private sector investment into central and eastern Europe."

The department sees Rabobank, ABN Amro, Citibank and ING Barings as others which it can approach for participating or even co-arranging.

"We see eye-to-eye with Rabo-bank because it is one of the few commercial banks that has a dedicated agribusiness department," says the spokesman. "Other banks are, however, gradually increasing their appetite for this type of business - ZAO Dirol proves this."

  • 01 May 1998

All International Bonds Ranking

Rank Lead Manager Amount $m No of issues Share %
1 JPMorgan 111,653.77 379 8.03%
2 Barclays 110,498.80 347 7.94%
3 Bank of America Merrill Lynch 101,573.05 316 7.30%
4 Deutsche Bank 99,049.91 375 7.12%
5 Citi 95,827.47 329 6.89%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
1 Credit Agricole CIB 9,929.31 26 7.07%
2 BNP Paribas 9,645.75 40 6.87%
3 HSBC 6,672.28 40 4.75%
4 Barclays 6,583.64 26 4.69%
5 Deutsche Bank 6,575.21 26 4.68%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
1 Goldman Sachs 11,056.32 30 12.83%
2 JPMorgan 8,454.91 40 9.81%
3 UBS 8,155.52 24 9.46%
4 Deutsche Bank 7,347.53 24 8.53%
5 Bank of America Merrill Lynch 6,847.17 17 7.95%