CEE Bonds

Rating: Baa3/BBB-

In 2014, emerging market bankers will be chasing after bigger mandates, but fewer of them if this year’s numbers are anything to go by. The average size of an emerging market bond in the first weeks of this year has leapt skywards compared to previous years while the number of deals priced has plummeted, according to Dealogic data. But DCM officials say they see little real change in the way deals are pitched or sold as a result of that new strategy.

Corporate bond issuance is set to get busier again in Europe next week, bankers say, with a drive-by deal also possible on Friday.

Russian energy company Gazprom impressed debt bankers with a smoothly executed seven year euro transaction on Wednesday, which was sold with a minimal new issue premium to a range of investment grade accounts, said syndicate officials on the deal.

Tich Mabikacheche has left Barclays EM DCM team after 2.5 years as an analyst on that desk.

Sberbank printed $1bn of subordinated debt at a price that three syndicate managers away from the deal called "very aggressive". But after being priced at par, the note was trading at 99.75-100 on Wednesday morning, indicating that the leads were right to push it.

Russian Agricultural Bank took its July 2018 senior bonds to $1.3bn with a $500m increase on Tuesday, and priced the deal with a decent concession after attracting new buyers into the tap.

Gazprom opened books on a seven year benchmark euro transaction on Wednesday morning. Bankers on the deal felt the starting concession was a modest 10bp-15bp, but those off the deal argued the issuer had started with a more generous pick-up.

Russian issuers have finally returned to the market this year, with both Sberbank and Russian Agricultural Bank printing dollar bonds this week. RAB's $500m deal is a tap of its outstanding $800m 2018s, while Sberbank's note is a $1bn 10 year non call five tier two bond, printed under the Central Bank of Russia’s clarified writedown language for Basel III compliant debt.

Sberbank has released price guidance of 5.625% for a 10 year non call five subordinated deal that bankers away from the deal are calling a “fair” level. But market participants on and off the deal say that the clarification of point of non-viability language has made little difference to the pricing of the bond.

AkLease, the leasing arm of Turkey’s Akbank, took advantage of yield hunting investors to sell its debut private placement in Hungarian forint. Investor demand for private placements in the currency and other emerging market local currencies is growing, according to MTN dealers.

Swiss syndicate bankers are expecting a renewed surge of emerging market issuance in the near future, with Indian issuer Bharat Petroleum and Brazilian financial Banco Safra both mandating for roadshows next week.