Central and Eastern Europe (CEE)

A pair of US sanctions against Russia could have potentially disastrous consequences for local and international bond investors, especially if a planned ban against the purchase of new sovereign debt takes effect, writes Lewis McLellan.

Emerging market sovereigns are regarded as stalwarts of the credit default swaps (CDS) market. Their liquidity is dependable, and participants can usually trade in large size with relatively low transaction costs and little price impact.

Global banks are, for the moment at least, standing by their Turkish clients despite deepening financial problems in the country. The yield on Turkey’s 10 year sovereign bond hit almost 20% this week, driven to this vertiginous height by diplomatic tensions with the US and an economy riddled with problems. Silas Brown and Lewis McLellan report.

Russian petrochemicals company Sibur is not close to making a decision on whether to go public, despite media reports in the last fortnight to the contrary, its CFO told GlobalCapital.

Fallout from a diplomatic incident drove yields on Turkish sovereign paper to almost 20% this week. While yields have come off their highs, the picture remains bleak for the beleaguered nation.

Sri Lanka and Turkey are preparing to sell their first Panda bonds, enticed by falling funding costs in China's bond markets. But given they both have lower credit ratings than previous sovereign Panda issuers, they may face an uphill battle as regulators scrutinise their finances.

We Soda, a soda ash producer fully owned by Turkish industrial conglomerate Ciner Group, has signed three seven year term loans totalling $1.66bn-equivalent in the biggest Turkish corporate loan in half a decade.

Turkish banks are gearing up for a round of loan refinancing at a time when the country is a risky economic hunting ground. But bank lenders are confident the loan market will support Turkish banks, albeit at wider margins.

Hopes rose this week of a revival for Russia’s equity capital markets when the US Treasury extended a key sanctions licence until October, allowing aluminium conglomerate EN+ to continue with a plan that would remove sanctions on the company.

The US has imposed sanctions on two senior officials in the Turkish government, prompting debt and equity markets to sell off and driving Turkish lira to over five to the dollar for the first time in history.

FMO has printed an onshore Georgian lari bond for the first time, with proceeds helping a drive to de-dollarise Georgia’s economy.

Turkey’s Akbank is seeking to refinance a pair of $337m and €515m one year loans signed last August.