Estonia's largest commercial bank, Hansapank, has asked 25 banks to submit proposals for a syndicated loan or a bond issue to raise Eu100m. Banks are discussing an extremely wide range of possible pricing for a three year term loan on the loan deadline which expires today (Friday). The deal could become the benchmark for borrowers from the Baltic states and other eastern European countries.
Several officials consider a margin around 130bp reasonable. One banker said: "Some bidders are heading towards the cautious end of the range, which is about 150bp. But we hear others are being really aggressive, and closing in on 100bp."
Another potential arranger said: "If you're bidding round 150bp, forget it. Some banks will push down towards 100bp, and even going below that level is not an impossibility."
The reason behind the spread is due to the Russian crisis that dramatically increased pricing for names like Hansapank. Now the effects are receding, the benchmarks must be reset.
The borrower's last deal, through guaranteed subsidiary Hansa Capital, carried a 175bp margin on the Eu13.4m EBRD tranche, and 225bp on the five year Eu26m commercial tranche, led by the EBRD, Commerzbank and Deutsche Bank.
The borrower, 53% owned by Swedbank, is a well respected eastern European credit, and as Estonia is coping well with the aftermath of the Russian crisis, officials believe pricing should fall towards former levels.
Potential problems may arise if lenders do not have credit limits for Estonia, and bidders who lose on pricing may not join at a later date.
