CEE Bonds
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Russian Railways’ lead managers last week claimed waiting a month for a favourable fall in rates before executing resulted in the lowest yield the company could have achieved on its €500m nine year bond. But that contradicts what bankers have often recommended as prudent bond market behaviour. Others should be cautious of following its example.
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Promsyvazbank (PSB) postponed its tier two dollar bond on Monday because of growing tension between Russian and Ukraine, but the borrower has every intention of returning to market once conditions improve. The Republic of Azerbaijan, meanwhile, has pushed on with investor meetings. Although it will likely face higher spreads for its inaugural dollar sale unless the situation is resolved soon. -
Turkey’s Finansbank has received little interest so far for private placements from the $1.5bn EMTN programme it set up on February 7. The lack of demand is common for a number of Turkish banks.
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Russia’s sovereign bond and CDS spreads were hammered on Monday following heightened fears about the possibility of conflict with Ukraine. The rouble touched new lows before an unorthodox central bank rate hike, and the volatility will make life difficult for Russian borrowers with bond plans, said emerging market debt bankers.
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European bank debt did not escape a general pullback from risk positions on Monday as the political future of Ukraine remained mired in uncertainty. Those with exposure to the country were hit hardest but the broader market was also weak in cash terms.
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The Republic of Azerbaijan has picked banks for its inaugural dollar bond and begins investor meetings on Monday. Comparably rated sovereigns like Russia and The State Oil Company of the Azerbaijan Republic (SOCAR) with provide reference points for pricing.
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This week’s CEEMEA deals were trading well in the secondary market on Friday morning. Abu Dhabi Commercial Bank’s $750m bond was almost 10bp tighter after being priced flat. Gazprombank’s 5.5 year transaction was slightly above re-offer, and Russian Railway’s nine year euro transaction was up after being sold against a particularly difficult backdrop.
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Brazilian lender Banco Safra sold its debut Swiss franc deal on Thursday. A strong response from investors allowed the bank to sell the largest deal in the currency from a LatAm financial.
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Russian borrowers undaunted by unrest in Ukraine are pushing on with issuance plans and largely being rewarded for their resolve. Gazprombank sold a four times subscribed transaction despite concerns about its Ukrainian exposure while Russian Railways printed a nine year euro bond only hours after Russian fighter jets were placed on high alert.
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Australian lender Bendigo and Adelaide Bank sold its debut Swiss franc bond on Tuesday, benefiting from investor interest in a greater variety of Australian issuers.
