Verizon printing $49bn, a US government shutdown, and Andy Murray winning Wimbledon. There are a lot of things in 2013 that EuroWeek wouldn’t have put money on happening back in January. But, barring some unforeseen disaster clutching hold of EM, we are predicting that CEEMEA volumes this year are going to exceed 2012’s record $185bn of bond issuance.
There may be a lot of doubters who question whether such an achievement is possible. But there have also been $165bn of CEEMEA bonds already placed this year, exceeding 2012’s year to date number by $9bn, a not inconsiderable amount.
That means, the market has absorbed $3.67bn of new supply per week on average this year. If that pace is maintained, a further $22bn is set to be priced before the end of December, which will pip last years' record by $2bn.
But what of the end of year slowdown? Last year issuers till sold $29bn of new bonds from mid-November to the end of December. And in 2012 there was no threat of the Federal Reserve tapering its quantitative easing programme looming in the new year — something that should act on the EM pipeline the way a large dose of prunes does on the constipated.
Even the same level of activity as in 2012 would see the CEEMEA bond market ringing in 2014 having touched an all time high.
Anecdotally, the evidence that a record is about to be broken is also intriguing. One bank, not in the top three bookrunners for the CEEMEA region, so accounting for less than an 8% market share, merrily informed us this week that it has $6bn of CEEMEA bonds raring to be printed before the end of the year.
There are seven CEEMEA issuers on the road this week and looking to print international bonds — Abu Dhabi Commerical Bank, Renaissance Credit, GEMS, Serbia, Domodedovo Airport, VEB and Vostochy Express Bank — and that’s excluding any of those smooth intraday deal executions that EM bankers have become so used to executing.
Even amid the volatility of EM bonds this week, if a bookie would make a price on the market exceeding 2012's volumes, we’d bet the EuroWeek ranch on it — or one of the barns at least.