CEE Bonds

Despite emergency rate hikes by India, Turkey and South Africa aimed at stopping the rot that tore through emerging market credit and currencies this week, senior bankers and traders insisted that this was not the beginning of a full blown EM crisis. And with the rise in credit spreads far from catastrophic, a blowout deal for Kuwait Projects Company and a healthy pipeline to look forward to, the evidence seemed to stack up in their favour, at least for now.

The wave of CEEMEA sovereigns tapping the euro market before the volatility of this week was hailed by most as a temporary aberration from the norm. But issuers with large funding needs should take this opportunity to start nurturing this market more carefully and become regular issuers in both dollars and euros in the same way that the more sophisticated western SSA issuers operate.

Despite the recent sell off in emerging market credits, investors remain interested in Turkish bank private placements, according to MTN dealers.

Oil products company Puma Energy has priced its debut high yield bond in line with guidance on Tuesday, relying on broad appeal to a varied investor base to overcome the sell-off in emerging market credits.

Emerging market bond bankers have been unnerved by the sell-off in their asset class this week. But as trading stabilised on Tuesday and interest rate hikes in Turkey and India calmed local currency selling, a new issue emerged from Latin America and bankers hope others in CEEMEA may not be far behind.

A €470.2m exchangeable bond from ČEZ, the first equity-linked transaction from the Czech Republic, saw a surge of demand for investors hungry for investment grade paper.

Emerging market bankers are pointing to the recent sell off in EM as a minor hiccup rather than a full blown EM credit crisis. The JP Morgan EMBI Global index was off only 30bp by the close of the day in London on Monday evening and the market has stabilised today, leaving syndicate bankers hopeful that the EM issuers roadshowing at the moment will be able to print deals shortly after the finish of their marketing this week.

The International Islamic Liquidity Management Corporation (IILM) this week expanded its short term dollar sukuk programme with an $860m three month issue.

Russian Railways is gearing up to offer the first Russian Eurobond for the year, with Barclays, Citi, JP Morgan and VTB Capital leading the deal.

Serbia may turn to sukuk as it eyes $600m in Eurobonds this year to help fill its €5.6bn funding target for 2014.

PKO BP became the latest emerging market issuer to target euro investors with the announcement on Wednesday morning that it had picked banks for a five year deal.

Romania made a stunning return to the dollar market on Tuesday, attracting nearly $12bn of demand for a dual-tranche deal that included the sovereign’s first ever 30 year issue.