CEE Bonds

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.

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.