CEE Bonds

It is a fine testament to the growing stature of Islamic finance that various novel borrowers are pressing ahead to issue international sukuk for the first time — the likes of Hong Kong, Luxembourg and Dogus Group among them. But with so many debuts revving up to join an autumnal convoy, those that can beat the traffic are advised to do so.

Turkish Alternatifbank has mandated Bank of America Merrill Lynch and Commerzbank to arrange a Commercial Bank of Qatar-guaranteed dollar bond. CBQ, rated A1/A-/A owns 74.25% of Alternatifbank, which has a long term issuer default rating of BBB from Fitch.

Year to date CEEMEA sovereign bond volumes are at their highest level ever, with the total sold so far already soaring past some analysts’ full year predictions. Issuance is less than $20bn off the record set in 2012, and with Macedonia and Bahrain adding themselves to the list of CEE and African sovereign deals still expected, 2014 could easily become the new benchmark for sovereign supply, said analysts.

The Republic of Macedonia has picked banks for its third ever bond deal and starts investor meetings next week.

Czech corporate Net4Gas has picked bookrunners for a debut euro deal and starts investor meetings next week. Bankers expect the CEE corporate market to keep them busy in the coming months.

Credit Suisse returned to the Australian dollar market after a four year absence on Thursday, selling a benchmark deal through its Sydney subsidiary. Strong investor appetite, particularly for a fixed rate tranche, allowed the bank to sell its largest ever trade in the currency.

Year to date CEEMEA sovereign bond volumes are at their highest ever, with the total sold so far already soaring past some analysts’ full year predictions. Issuance is less than $20bn off the record set in 2012, and with several CEE and African sovereign deals, including from Turkey, still expected 2014 could easily become the new benchmark for sovereign supply, said analysts.

The appointment of new clearing banks in Paris, Frankfurt and Seoul, as well as the promised expansion of two way cash sweeping to all foreign corporates in China, should help boost non-Chinese offshore RMB issuance, analysts reckon.

Russian steel company NLMK Group announced a tender offer on its 2018 and 2019 dollar bonds, and is planning to buy back up to $100m across the two notes.

Fresh mandates are helping raise hopes of an increase in the hitherto meagre volumes of primary CEEMEA issuance. But that market’s pipeline is being dwarfed by an approaching wave of Latin American transactions as the region refuses to let the Fifa World Cup get in the way of deal flow.

Bondholders have approved Ukrainian financial VAB Bank’s second attempt at another restructuring of its June 2014 Eurobonds. The agreement helps the bank preserve liquidity at a time when many Ukrainian institutions are under pressure, but analysts are not ruling out the possibility that the issuer could return for a third restructuring in the future.

It is a fine testament to the growing stature of the Islamic finance market that various novel borrowers are pressing ahead with plans to issue international sukuk for the first time — the likes of Hong Kong, Luxembourg and Dogus Group among them. But with so many debut deals revving up to join an autumnal convoy, those that can beat the traffic are advised to do so.