CEE Bonds

The European Bank for Reconstruction and Development has said in a research note that stable funding for global banks in central and eastern Europe is the biggest factor determining whether they benefit local economies.

Banks are under pressure to lend to Russian borrowers. But though bankers have grown accustomed to moving mountains for the Russian issuers, they should not fear the repercussions if this time they cannot.

Russian banks and corporates have around $5.9bn of international bonds maturing before the end of this year. The list includes paper from Sberbank and Gazprombank which are both sanctioned by the US and EU. Origination bankers evaluate the likely methods of refinancing.

Poland’s MBank Hipoteczny has issued its fifth and sixth covered bond deals of the year which combined to form the largest ever issue denominated in Polish zloty. The self-led deal will benefit from the new Polish covered bond law, which should be implemented in January 2015 and which is likely to offer a considerable rating uplift, and that boosted demand sufficiently for the leads to issue a size bigger than planned.

4Finance, a Latvian short-term lender with operations across Europe, sold its $200m five year put three bond on Friday despite a rocky week in EM and high yield secondary trading.

VTB, one of the Russian banks which has been sanctioned by the US and EU, has said that despite the restrictions put in place international banks are still helping to finance the firm.

Westpac New Zealand broke more than a month of silence from international issuers in the Swiss franc market on Tuesday, selling a new six year print. The deal was priced around flat to outstanding paper, with investors starved of primary and secondary supply willing to take the aggressive level.

Latvian short term finance company 4Finance has released initial price thoughts at 11.75% for a five year put three dollar bond. The bond is the first international deal from a Latvian non-sovereign issuer for seven years.

Westpac New Zealand broke more than a month of silence from international issuers in the Swiss franc market on Tuesday, selling a new six year print. The deal was priced around flat to outstanding paper, with investors starved of primary and secondary supply willing to take the aggressive level.

Caught up in the sell-off in the emerging markets, issuers from the CEEMEA region have been reluctant to come forward for new bonds this week.

Ukrainian Agricultural company Mriya has not made interest and amortisation payments on certain of its debt obligations and is warning bondholders of its $250m 10.95% 2016s and $400m 9.45% 2018s that its balance sheet may need to be restructured. Other Ukrainian companies may find themselves running into similar difficulties as the crisis in their country escalates.

Russia is now subject to its toughest economic sanctions since the end of the Cold War. With the US and Europe effectively closed to them, Russian borrowers are searching for other options. Asia is top of their list, but they are unlikely to find the support they want.