Central and Eastern Europe (CEE)

Turkey’s president Recep Erdoğan delivered a shock to investors on Monday, announcing a cabinet reshuffle in which he removed market favourites Mehmet Simsek, who was deputy prime minister, and Naci Agbal, minister of finance. He appointed his son-in-law Berat Albayrak, who previously served as energy minister, as finance minister.

The Russian Ministry of Finance has released its borrowing plans for the next three years, starting with a plan to borrow Rb1.48tr ($24bn) in 2019. Though the plan, which includes continuing to raise money internationally, is being seen as brazen, bankers in London said that there will be appetite.

Turkish banks have enough foreign currency liquidity to withstand a prolonged capital market shut out, according to ING. While this remains unlikely, small signs of deterioration have begun to show in terms for the biggest source of FX funding in the country’s banking system - syndicated loans.

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Corporate bond issuance from central and eastern Europe, excluding Russia, is up nearly 30% year on year as borrowers move early to lock in low coupons before the European Central Bank stops buying bonds and starts raising interest rates.

Lietuvos Energija on Tuesday made full use of its green credentials to price a €300m bond with a much smaller new issue concession than has been seen on the majority of recent new issues.

Lietuvos Energija, a quasi-sovereign utility company that is fully owned by the government of Lithuania, was on track this week to price its second green bond. The deal will also mark the first trade from central and eastern Europe in over two weeks and offers an over 100bp pick up over the sovereign.

The Republic of Srpska, an autonomous entity in Bosnia and Herzegovina, has printed its five year Eurobond, but the final size fell short of the hoped for €200m.

Factors internal and external to the emerging markets are this week combining to stymie new issuance.

Republika Srpska, an autonomous entity in Bosnia and Herzegovina, has printed its five year Eurobond, but the final size has fallen short of the hoped for €200m.

The resounding victory of Turkish president Recep Tayyip Erdoğan in this weekend’s presidential election has driven Turkish equities even lower, as concerns rise over the overheating economy. But the president could turn bears into bulls if he stabilises the economy, and some investors will jump at the chance to buy cheap Turkish equities.

Turkish assets gave back early gains on Monday morning as investors digested the news of the victory of Recep Tayyip Erdoğan and his AK Party (AKP) in the country’s presidential and parliamentary elections.