CEE Bonds

There were several triumphant feats last week in the EM primary bond markets as Turkey and Slovenia defied the doom mongers to print good sized deals. In their wake, there was an inevitable debate about the premiums each issuer paid. But in markets this tough, market access is should worry participants more than the odd basis point saved here or there.

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. This may be a function of sovereigns having so far dominated the market — especially in CEEMEA — but is a trend that could be the shape of things to come for the rest of the year.

In 2013, several CEEMEA issuers roadshowed, mandated or even released price talk for a new Eurobond before postponing the deal. EuroWeek Emerging Markets recaps the borrowers that may be waiting for a window, and finds out whether they are still looking or have embarked on another funding plan.

Year to Date Central and Eastern Europe DCM Bookrunner Ranking

The latest CEEMEA transactions are finishing the week in fine form. Strong secondary performances for the large sovereign bonds from Turkey and Slovenia have added to the resurgent sentiment for EM risk, which should benefit financial and corporate borrowers in those countries and planned deals from other sovereigns like Indonesia.

Polish state-owned Bank Gospodarstwa Krajowego is setting up an EMTN programme in the second quarter of 2014 and could make its debut in the international markets mid this year, according to Mariusz Grab, head of the bank's financial market department.

The Republic of Slovenia repriced its bond curve this week with a $3.5bn dual tranche transaction sold with a negative new issue premium. The blow-out deal helped restart CEEMEA supply, and despite the lack of concession, secondary demand pulled the sovereign’s euro and dollar bonds up to 30bp tighter, said bankers on the deal.

Bendigo and Adelaide bank could build on a busy start to the year for Australian and New Zealand banks in Swiss francs next week. It is due to meet investors in Switzerland, following on from a five year deal from ANZ New Zealand on Wednesday.

Turkey led a string of CEEMEA issuers this week that brought well received bond deals to market despite evidence that the situation in emerging markets bares an alarming similarity to that in 1998 which sparked a full-blown crisis in Asia, writes Francesca Young.

Sberbank’s prospective 10 year subordinated bond looks unlikely to emerge this week after the bank finished investor meetings. A packed roadshow schedule means the leads are still collating feedback, and a softer market tone and an upcoming US holiday means Tuesday could be the next potential launch date.

The Republic of Turkey’s $1.5bn 6.625% 31 year bond, printed only a fortnight after the country’s fiscal problems were blamed in large part for dragging CEEMEA into turmoil, crossed the finish line with an awe-inspiring $6.25bn book. The huge success of the deal, which lead managers said was printed with only a 10bp new issue premium, prompted a rally across CEEMEA on Wednesday as it became clear that fears over Turkey’s capital markets access have been overblown.

Slovenia’s recent $3.5bn bond has repriced the borrower’s bond curve tighter by as much as 25bp, according to bankers on and off the blow-out deal. Although some of the borrower’s dollar paper has not recovered all the ground lost in the latest emerging market sell-off, the fact that the Slovenia’s euro paper has been pulled tighter made it clear the performance qualified as a repricing rather than a recovery, said bankers on the bond.