Latvia joins MTNs, but plenty room for more

The Republic of Latvia has become the latest issuer to enter the warm embrace of a medium term note programme. With central and eastern European credits offering an enticing prospect for private placement investors, other countries from the region should follow suit.

  • By Craig McGlashan
  • 18 Jun 2013
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At the start of the year, MTN dealers tipped CEE credits to be one of the success stories of 2013. And who could blame them? The Slovak Republic had just placed a bumper €1.5bn 20 year note, and a little later the issuer — along with the Republics of Austria and Poland — said that long dated private placements could form a significant part of their 2013 business.

Now Latvia has joined the party, launching a global MTN programme last week. The sovereign has made clear that both public and private deals could follow, taking advantage of the flexibility that an MTN programme allows.

Latvia could well follow Slovakia and use the private route to lock in some long dated funding — a welcome opportunity given its rocky recent history. A smattering of private deals of different tenors would help to build a curve. And in the public and private markets, having established documentation will allow it to remain nimble in the face of potential challenges ahead.

Latvia will be able to attract demand because of the spread it will have to offer over more established peers. One dealer said in January that rare credits offering a bit of yield pick-up, and that could go long, would fly — although there are not a lot of names that tick all those boxes.

But there are some. Latvia’s immediate neighbours, Estonia and Lithuania, spring to mind. 

Ratings should certainly not be a problem. Estonia is scored higher than its Baltic peers by all three major ratings agencies. Moody’s rates Lithuania two notches above Latvia.

There are also plenty of financial institutions and corporations within those countries that could take advantage of an MTN programme. Over in the Czech Republic, electricity conglomerate Čez is a regular visitor to the private placement market.

But the opportunity that exists right now — where investors are more than happy to consider new names if it means adding a few basis points onto a coupon — will not last forever. 

Its future might be more clear after this week's FOMC meeting in the US, but issuers in the region have never had a better chance to build up a name for themselves than they do now. They should take this opportunity to get themselves firmly — and permanently — on investors’ shopping lists.

  • By Craig McGlashan
  • 18 Jun 2013

European Sovereign Bonds

Rank Lead Manager Amount €m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 4,822.01 5 6.78%
2 NatWest Markets 3,741.73 3 5.26%
3 Citi 3,544.03 6 4.98%
4 Goldman Sachs 3,231.80 5 4.54%
5 Barclays 2,461.72 2 3.46%

Dollar Denominated SSA (Excl US Agency)

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 8,145.87 7 13.12%
2 Citi 7,609.31 11 12.26%
3 Deutsche Bank 7,459.81 7 12.02%
4 Goldman Sachs 6,147.24 8 9.90%
5 JPMorgan 6,097.01 8 9.82%

Bookrunners of Euro Denominated SSA (Excl US Agency)

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Barclays 7,351.66 8 10.93%
2 JPMorgan 6,925.07 9 10.29%
3 Credit Agricole CIB 6,342.60 7 9.43%
4 Goldman Sachs 5,890.15 6 8.75%
5 Citi 5,011.57 14 7.45%

Bookrunners of Global SSA (Excl US Agency)

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 14,913.06 34 9.57%
2 JPMorgan 14,450.74 42 9.27%
3 Goldman Sachs 12,082.56 15 7.75%
4 Deutsche Bank 11,044.38 20 7.08%
5 HSBC 10,585.95 16 6.79%