GREECE: CEE or not?
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Emerging Markets

GREECE: CEE or not?

Greek high yield booms

High yield professionals debate the cee region’s boundaries vigorously. A number focus quite strictly on a central European core. “We still argue that anything east of Vienna is pretty much a non-starter for the high yield product,” says one high yield banker. 

Others follow their buyers across a broader swathe of territory. “How far east and south are high yield investors willing to go? Probably Ukraine. And the Balkans are all relatively mainstream now,” judges one high yield banker.  

Many firms treat Russia and other CIS jurisdictions as emerging markets plays and regard them as mainly saleable to specialist EM investors — though some Russian deals have carried high yield covenant packages, for example. 

At the same time, some now include Greece in their definition of CEE. 

Regardless of definition, Greek high yield is booming. “With the Greek banking system still recapitalising, companies that need to replace bank debt and/or fund growth need to find alternatives,” says Douglas Clarisse, managing director of leveraged and acquisition finance, capital financing at HSBC in London.

In April, gaming firm Intralot achieved 11 times oversubscription on its second bond in less than a year, for example, with a triple-digit order from one leading institutional investor. In the same week Public Power Corp (PPC) raised as much as €700m in two tranches rated B by Standard & Poor’s. 

“You could argue that PPC is an emerging markets credit but it had significant high yield and even investment grade buyers,” notes one high yield banker. “From an emerging markets point of view Greece is the most interesting market. It is much riskier than Poland, say, but it is coming back very strongly.”

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