CEE Bonds

A new Panda bond issue by German car manufacturer Daimler has established a milestone in RMB funding for offshore borrowers, marking the first ever such deal from a corporate name. The Rmb500m ($81m) one year paper priced at 5.2% on Friday, March 14 and was privately placed through Bank of China.

Hungary built a herculean $14.5bn order book for a dual tranche dollar deal on Tuesday, which should herald a similarly strong response for other CEEMEA sovereigns planning bonds. Capital flight from Russia has moved into other CEE credits, increasing demand that was already heightened by weak supply.

Sberbank CIB has hired Peter McNulty from RAE Capital to become global markets international projects MD. He will be based in Moscow and report to Jonathan Lester, head of business management and development, global markets.

Hungary has left CEEMEA sovereigns in no doubt as to the degree of demand awaiting them in the bond market. A speech from Russian president Vladimir Putin on Tuesday reassuring the world that Russia's ambitions in Ukraine extended no further than Crimea was like music to the CEEMEA bond market's ears. A sharp rally prompted Hungary to launch a dual tranche deal that drew almost $15bn from 800 accounts. Slovenia, Bulgaria and Romania, meanwhile, are in varying states of preparation ahead of their own deals.

Bulgaria has mandated three bookrunners for its next Eurobond after sending out an RFP in early February.

Promsvyazbank sold $100m of privately placed seven year subordinated bonds on Friday via Goldman Sachs, ING and UBS, the same banks that were last month mandated to arrange a public subordinated dollar deal for the Russian bank.

Romania has sent out a request for proposal for a new benchmark bond with the deadline set for Thursday, according to an emerging market debt banker. Despite recent political volatility, the country’s strong fiscal fundamentals should help secure a solid response for its second deal of the year.

CEE sovereign issuers are standing firm this week, boldly pressing on with their bond issuance plans despite President Vladimir Putin's draft bill approving Russia's annexing of Crimea and the sanctions imposed on Russia by the US and the EU.

Banks have been fretting about Russian loans, both because it looks bad to lend to a country which has recently annexed part of another sovereign state, to widespread international condemnation, and because they don't want to be stuck with the risk if wider sanctions are imposed. They should band together to push Russian issuers towards their bond desks instead.

The bond market on Monday reacted calmly to a Crimean declaration of independence and its application to join Russia. Russia's bonds are still under pressure and CDS levels are still rising. But the primary CEEMEA market remains open, and Middle Eastern borrowers are among those planning deals, said EM debt bankers.

A new Panda bond issue by Daimler, a Germany car manufacturer, has established a milestone in RMB funding for offshore borrowers, marking the first ever such deal from a corporate name. The Rmb500m ($81m) one-year paper priced at 5.2% on Friday, March 14 and was privately placed through Bank of China.

All eyes are on Crimea, where Russia’s reaction to a referendum on Sunday will determine whether the CEEMEA market is thrown into confusion or can still hold out hope of short term bond supply. But most emerging market analysts and debt bankers expect the situation to get worse before it gets better, which means a broad retreat from EM risk.