CEE Bonds

China Construction Bank (CCB) Frankfurt branch launched the first Frankfurt-issued renminbi-denominated bond from a subsidiary of a Chinese name on Monday morning. The two year transaction, which will clear and be listed in Frankfurt, had attracted more than Rmb1bn ($162m) in orders less than half an hour after books were opened.

Throughout the last few months of the Crimea crisis, Russian Otkritie has carved out a new but strong business of acting as broker for structured loans between Russian corporates and Western lenders, allowing Western institutions to continue lending to their Russian clients, a senior banker at Otkritie told GlobalCapital Emerging Markets. However, Otkrities’s once thriving local and nascent international bond businesses are not faring quite as well as political tension and slower economic growth has taken its toll on Russia.

Some banks big in the emerging markets this week laughed at GlobalCapital when we asked whether any cuts had yet been made to their Russian bond teams. "It has only been two months since the start of the Crimea crisis!" they said, and this is, after all, the emerging markets, where volatility is par for the course. Many are cheerily optimistic that Russian bond business could return in the second half of this year. We disagree.

JP Morgan and Morgan Stanley’s EM rivals may be gleefully awaiting punishment of those banks through future Russian mandates after this week they helped Ukraine raise $1bn via a US-AID backed bond, but they should not bet the ranch on a Russian freeze out.

Bahrain-based alternative asset manager Investcorp made its Swiss franc debut on Thursday afternoon, increasing the size of a five year deal in response to strong demand from retail investors drawn in by a juicy coupon.

The most politicised new issue for many years – Ukraine’s USAID-backed $1bn five year bond – could be followed by several more as the sovereign battles both the threat of civil war and a raft of redemptions this year and next. But lead managers run the risk of Russia shunning them on its rival future mandates, bankers have warned.

Montenegro sold a €280m five year bond this week, pricing its largest ever bond deal with its lowest ever coupon. After drawing €1.6bn in orders the notes were bid over three cash points higher in the secondary market on Thursday, with under allocated investors chasing paper in the secondary market.

Russian steel manufacturer Severstal kicked off what some bankers expect to be the first of a run of Russian asset liability management trades this week. Low cash prices and leftover Capex cash are prompting the country’s corporates to turn to tenders, they said, but a volatile and uncertain bond market presents problems for such exercises.

Severstal bought back $288m across its 2016 and 2017 dollar bonds this week, in an exercise some bankers expect to be the first of a run of Russian asset liability management trades. Low cash prices and leftover Capex cash are prompting the country’s corporates to turn to tenders, but a volatile and uncertain bond market presents problems for such exercises.

The Republic of Croatia will start investor meetings in Europe for a benchmark Reg S only bond on Monday (May 19).

With Russia’s annexation of Crimea and growing unrest in Ukraine causing concern among Western banks, UniCredit’s summed up the mood with a warning it was preparing for the worst European banks are “preparing for the worst” in the wake of Russia’s ill-starred annexation of Crimea and Moscow’s determination to foment unrest in Ukraine, a leading banker warned yesterday.

An imminent signing of a $500m loan by Uralkali, the world’s largest potash producer, has not convinced bankers that Russia’s frozen international loan markets is anywhere near thawing out The virtual closure of Russia’s international loans market in the wake of its annexation of Crimea in March looks unlikely to lift despite the imminent signing of a $500m deal by a leading commodity producer.