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Emerging Markets

CEEMEA bond market's pulse kept beating by rare issuers

A trio of bond issues from across the Balkan region – Turkey, Romania and Macedonia – are keeping emerging market investors ticking over as the Thanksgiving shutdown nears.

On Monday, Albaraka Turk, a participation bank, broke new ground for the Turkish market by issuing a Basel III-compliant tier two capital deal in sukuk format. 

Despite its speculative grade rating, strong support from Gulf Co-operation Council accounts – both Islamic and conventional – enabled the $250m 10 year non-call five deal to get over the line.

Senior Turkish issuance is also expected, after the announcement early on Monday that Finansbank had picked leads for a potential dollar benchmark bond.

The lender, which was put up for sale by parent National Bank of Greece in early November, was understood to be looking for an opportunistic trade before the US holiday but nothing had emerged by Wednesday morning.

Monday also brought the long-awaited bond market debut of New Europe Property Investments (Nepi). The Romania-based firm first met investors in October last year but struggled to gain price traction due to its high yield rating.

Its return to the market this week with two investment grade ratings was more successful. Nepi was able to raise €400m of 5.25 year funding, in the first bond issue from a Romanian property firm.

Macedonia also slipped into the market before the start of the holiday period, pricing a €270m five year two weeks after the end of investor meetings.

Initial price thoughts of 5.375% were seen as wide, implying a new issue premium of as much as 70bp. The final pricing of 5.125%, however, was seen as fair for a sub-benchmark issue.

Loans get chunky

The pipeline of emerging market loans is not overflowing, but the deals in the works this week are big.

Emirates Global Aluminium, jointly owned by the Abu Dhabi and Dubai governments, launched syndication on Tuesday for a $4.9bn seven year debt facility, including both conventional and Islamic financing, to replace existing loans.

EGA’s facilities are structured with a three year grace period of no amortisation and a 30% balloon payment on maturity. EGA expects to complete the syndication by the end of the year and will target its relationship banks in the United Arab Emirates, as well as regional, Japanese, European and North American banks.

Meanwhile, Turk Telekom has agreed an $826m-equivalent loan with banks to refinance debt and provide working capital. Türk Telekom’s club loan facility comprises tranches of €420m and $380m. It has a five year tenor and a three year grace period. The loan will pay 180bp over Euribor and Libor.

Bank of America Merrill Lynch was coordinator, with 14 banks in total taking part.

And state-owned Bulgarian Energy Holding Co has invited 25 international banks to provide it with a loan of up to €650m by the end of the year. Offers are expected to be submitted in the next two weeks.

LatAm outlook brightens

Latin American bond markets could be about to get a facelift, just when they need it after Argentina's people voted for business-friendly Mauricio Macri in Sunday's presidential elections. Moody's has granted the sovereign a positive outlook, and mortgage lender Banco Hipotecario has already taken advantage of sentiment to raise $200m in what debt capital market bankers hope will be the first of many Argentine deals in the next few years.

With new issuance volumes down thanks to a combination of recession in Brazil and volatile markets, and low funding needs across the region, a new era for Argentina could become a rare bright spot in Latin America — from a market perspective at the very least. 

Macri's victory looked unlikely just a few months ago but his strong performance in the first round led to a rally in the country's bonds. But since the election, bonds have remained more or less stable as investors' thoughts turn to how Macri can implement market-friendly policies without causing too much short term pain to the economy.

Francesca Young +44 20 7779 7313

Oliver West +44 7517 777597

Elly Whittaker +44 20 7779 8361

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