CEE Bonds

Two Turkish financial institutions, Isbank and TSKB, braved the market this week with new issue premiums that edged lower than recent comparable deals, showing how the market has stabilised since Yapi Kredi printed its bond on October 15.

Romania and Lithuania priced euro-denominated bonds this week, prefunding for 2015. But emerging markets bankers said the lower European rates outlook could delay others planning issues in the currency. By contrast, dollar funding flows may be as strong as ever — despite the recent volatility as sovereigns try to lock in low rates before the market changes heart again on US growth outlook.

Turkish bank Yapi Kredi printed a $500m five year bond last week on a day when its curve widened by 25bp. Going ahead with the deal seemed self-defeating to many, but GlobalCapital believes Yapi Kredi behaved honourably, and investors should reward its honesty in future deals.

Lithuania printed its €1bn 12 year bond on Wednesday with 0bp-5bp new issue premium, according to a syndicate official on the trade, having built a book of €3.65bn for the bond.

Türkiye Iş Bankasi has tightened price guidance to 340bp area over mid-swaps on a 5.5 year dollar benchmark bond, bringing the third Turkish financial institution bond in a fortnight — after Yapi Kredi and TSKB — and offering around a 10bp new issue premium.

Romania built a book of €3.8bn on Tuesday for its €1.5bn 10 year bond, and printed the deal inside its own dollar curve. But Romania paid a higher new issue premium than usual for its deal, indicating investor caution after the sell-off in emerging market bonds last week.

Turkish consumer products company Yasar Holdings is embarking on a roadshow with Barclays and Citi. Investor meetings for the deal start in London on Friday and take place in the US on Monday, Tuesday and Wednesday.

Turkish Development Bank Türkiye Sınai Kalkınma Bankası printed its $350m bond at 380bp over mid-swaps on Tuesday, ratcheting in pricing 20bp inside initial price talk and building a $1.3bn book. But leads estimated that the note still needed to pay a double digit new issue premium as investors remained cautious after last week’s volatile market.

Lithuania has released initial price thoughts for a €1bn 12 year bond at 115bp over mid-swaps, offering a 25bp new issue premium, in line with the pick-up offered at the same stage by Romania on Tuesday. Bankers away from the deal said that they expect 10bp-15bp of tightening before the deal prints.

CEEMEA deals have returned after the sell-off last week. Despite a persistent soft tone to the market TSKB printed its $350m five year bond on Tuesday while Romania sold a €1.5bn deal. Meanwhile, Polish coal company JSW has embarked on investor meetings for a bond and Lithuania has put out guidance for a new deal.

Jastrzębska Spółka Węglowa started the roadshow for its dollar denominated Reg S/144A bond on Wednesday (22 October) via Credit Suisse and JP Morgan.

Turkish Development Bank Türkiye Sınai Kalkınma Bankası has tightened price guidance for its $350m five year bond to 387.5bp-400bp over mid-swaps. The bank released initial price thoughts for its debut at 400bp over mid-swaps earlier on Tuesday morning, having waited for a calmer market window since the end of its roadshow last week. Despite the tightening, one analyst still saw the pricing as generous.