CEE Bonds

Bank of Russia (CBR) has stepped in to help stricken Otkritie, in what is the first bail-out of a systemically important bank in Russia, and arguably the largest Russian bank failure in history.

News of Otkritie’s bail-out has filled the buy-side with questions about the nature of the Centra Bank of Russia’s recovery plans sending Otkritie’s subordinated bonds yo-yoing between a cash price of 49 and low to mid 80s.

Tajikistan has named two lead banks for its first ever bond, the proceeds of which will be used to partially fund a hydropower plant project.

Yields on subordinated bonds issued by Otkritie remained at over 40% on Tuesday after rumours of bail-out plans by the Russian Central Bank hit the market on Friday.

Otkritie Bank this week offloaded a 19.85% stake in Cypriot RBC Bank in a move that analysts said was an attempt to ease liquidity concerns after what had been a volatile few weeks for the lender. But they dismissed concerns over the sector as being overblown, saying any problems were largely confined to Otkritie.

Russian bank debt has fallen out of favour after events snowballed into fears that Central Bank of Russia is lining up to pull the plugs on Credit Bank of Moscow (CBM) and Otkritie.

Nomura has added a new head of global markets sales for Russia and CIS as it continues to expand its emerging markets business following the appointment of David Ishoo-Mirzayoo as head of CEEMEA sales in March.

The state of Russia's banking system is making investors nervous and causing bond prices to drop. But that does not necessarily mean funding troubles for some firms in the sector.

Flows into emerging market bond funds remain strong, and with a heavy pipeline building for September, investors will have plenty of opportunities to put their money to work. But with no new issues this week, investors were combing through Q2 results looking for opportunities to switch up portfolios.

Turkish oil refiner Tupras has received approval from the Turkish Capital Markets Board to issue up to $1bn of external debt as the non-financial corporate pipeline builds in Turkey.

Supply of Russian Eurobonds is expected to remain healthy through to year end, with debt bankers this week mainly dismissing concerns that enhanced US sanctions and changes to local repo eligibility criteria could curb demand after the summer break.

Akbank has sold its first mortgage-backed covered bond. The deal, which will fund green projects, was privately placed with the European Investment Bank.