CEE Bonds

Russia bonds burst back to the top of the emerging market priority list without a sanction being lifted after Alfa Bank smashed through its own yield curve on Wednesday. Demand is rampant among supply-starved investors who will be gleeful about the thawing of the geopolitical frost between Russia and the west, writes Francesca Young.

A 12 month roller coaster ride for US rates expectations has ended with the 10 year Treasury yield back where it started, and in the meantime the CEEMEA bond market has been turned on its head for completely unrelated reasons.

Alfa Bank’s print of $500m 5% 2018s on Wednesday, which smashed 25bp through its own curve, demonstrated how big investor demand for Russian credit has become as the geopolitical frost begins to thaw.

Renaissance Securities is offering to buy back what remains outstanding of Renaissance Credit’s 7.75% 2016 bonds.

The order book for Russian Alfa Bank’s first senior unsecured bond in three years has reached $2.75bn, and guidance for the three year note has been crunched to 5.125% area.

Bankers are predicting a strong return of Russian bond issuance from non-sanctioned credits in 2016. But these issuers would be foolish to wait until next year when there is an issuance window open now.

Alfa Bank has mandated three banks for a senior dollar bond — only the second Russian financial institution bond this year — as the CEEMEA bond markets held stable after the terrorist attacks in Paris over the weekend.

Ukraine’s Privatbank has received approval from the High Court of England and Wales for a restructuring deal approved by holders of its subordinated Eurobonds.

Allied Irish Banks (AIB) could be ready to give investors a rare taste of periphery bank capital soon, but evidence of investor appetite for higher beta paper was mixed this week.

The Romanian mortgage market is set for growth after local authorities amended its previously unusable covered bond law to bring it into line with the best standards in western Europe.

Banco Popular Español became the first peripheral bank to launch senior debt in just under two months on Thursday, paying around 20bp of new issue concession to tap its outstanding February 2020 bonds.

Albaraka Turk Katılım Bankası (Albaraka Türk), has mandated seven banks to arrange a Basel III compliant Reg S tier two subordinated sukuk — only the second from Turkey and the first in sukuk format.