Central and Eastern Europe (CEE)

Conviction levels are low among emerging market investors with many waiting on the sidelines this week as geopolitical risk and local currency weakness persist in wreaking havoc on EM bonds.

Republic of Latvia was on track to print its new dual tranche euro-offering on Wednesday, though soft markets meant that it was offering a 7bp-10bp new issue concession at the final spread.

Bank Gospodarstwa Krajowego (BGK), Poland's state development bank, has set the reoffer spreads for its seven and 12 year euro bonds. Combined books are in excess of €800m, evenly split between the tranches.

The UK's foreign affairs committee report, released on Monday, holds the US Treasury’s sanctions strategy in high regard, because of the immediate impact on financial markets. But it misunderstands the reason for the US-driven sell-off, and so its recommendations are faulty as well.

Republic of Latvia has mandated banks for a new 10 year, plus a possible reopening of its long end bonds. Bonds issued by CEE sovereigns have held up well over the recent months of trading volatility, and bankers expect the deal to go well.

The UK Foreign Affairs Committee on Monday recommended “closing the loophole” that allows Russia to continue to support its sanctioned banks and companies, by prohibiting persons in the EU from buying Russian debt where the bookrunner is a sanctioned entity.

Telecom Egypt has agreed credit lines totalling up to $900m, as Egyptian borrowers find a warm reception from lenders.

Russian oil company Gazprom has signed a €600m five year loan facility from Crédit Agricole, bringing its international borrowing tally above €1.3bn since it regained its investment grade status earlier this year.

Sometimes, investors get hit by political events that come out of nowhere. Other times, they walk straight into an oncoming freight train, even though it's blowing its horn at top volume.

Turkish president Recep Tayyip Erdoğan sent the country’s sovereign bond yields flying this week as he vowed to take more responsibility for monetary policy if he wins next month’s elections. His comments prompted another sharp dive in the value of the Turkish lira — felt strongly by the country’s dollar debt issuers — as investors feared that even if the central bank does hike rates to defend the currency, the measure could be soon reversed. Francesca Young and Mike Turner report.

Turkey’s Isbank has signed a $1.48bn-equivalent syndicated loan in line with the existing pricing benchmark for its compatriot peers, again showing that rating downgrades have little effect on loan borrowing rates for the country’s banking sector.

Equity and bond investors hoping for the Turkish central bank to step in and cool its overheating economy will be dismayed by President Erdogan’s pledge to influence its decisions. But they should not be surprised.