CEE Bonds

Belarus’ president Alexander Lukashenko has suggested that the country may hold debt restructuring talks this year, just weeks after the country sent out an RFP for a new Eurobond. The news sent Belarus’ 2015 Eurobond crashing 26 cash points. Emerging market bankers warned of a contagion effect in EM debt restructuring.

Slovakia’s Eustream, a crucial pipeline that carries Russian gas to Europe, has mandated Citi, ING, Société Générale and UniCredit to arrange a series of fixed income investor meetings in Europe starting on Monday.

Russian officials are due to present plans for a bad bank to the government on Friday, as part of a range of measures unveiled on Wednesday aimed at combating the sharp economic downturn. But the creation of a bad bank is the most uncertain of all the proposed measures, said Russian bank analysts, and has attracted opposition from high ranking ministers.

Greece's new government on Tuesday said that the EU did not have their consent for the statement released condemning Russia's alleged involvement in the Ukraine crisis and calling for broader sanctions. Analysts see the move as one designed to put pressure on the EU for a re-profiling of the country’s debt and has raised questions around whether the EU will now be able to escalate Russian sanctions without giving in to Greece.

Vakifbank priced the first ever Basel III compliant tier two bond on Monday, a $500m 10 year non-call five. But though bankers estimated that the bond paid around 115bp-116bp over its old style tier two bullet 2022s, they said it was difficult to strip out the cost of the addition of point of non-viability features.

Standard & Poor’s downgrading of Russia to junk made plenty of headlines on Monday but much of the pasting that Russian bonds took on Tuesday was in response to escalating tensions with Ukraine, with the downgrade having been expected.

Vakifbank has released price guidance for the first ever Basel III compliant tier two trade from Turkey at 7% area. Bankers are expecting tightening as the deal offers 120bp-140bp over the trading of the bank’s old style tier two 2022s.

Ukraine on Wednesday said its ministry of finance would “consult with the holders of Ukrainian international sovereign debt so as to improve Ukraine’s medium term sustainability”, which analysts have taken to mean that a restructuring or reprofiling of the bonds is on the way. However, the country’s bonds sold off only around three points, as investors had already priced in the likelihood of the move, rebounding later in the day to finish two points higher.

Russian Standard Bank is making a second attempt to secure investor support for its capital update after failing to generate enough interest first time round. RSB re-launched the consent solicitation for its 10.75% 2018s on January 19.

Ukrainian corporate restructuring has resumed with Ferrexpo, a Ukrainian iron ore pellet exporter, which is looking to exchange its $500m notes due 2016. Analysts expect this to be the first of several such offers this year as political and economic uncertainty in the region continues.

The Republic of Serbia plans to issue its debut euro-denominated international bond this year, Branko Drcelic, head of the Serbian Debt Management Agency said at a conference on Tuesday.

Ukraine on Wednesday said that the Ministry of Finance will “consult with the holders of Ukrainian international sovereign debt so as to improve Ukraine’s medium term sustainability”, which analysts have taken to mean that a proposed restructuring or reprofiling of the bonds is on its way. The country’s bonds only sold-off around three points though as investors had already priced in the likelihood of this move.