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2017 Bond Deals of the Year: Emerging Markets

By Oliver West, Virginia Furness
02 Jan 2018

For CEEMEA bonds, 2017 was a record breaking year and one which pushed the boundaries of product, tenor, and issuer. The $200bn of bonds raised in CEEMEA, and the $140bn raised in Latin America are the highest annual volumes on record. Investors’ seemingly insatiable appetite for EM debt fuelled massive inflows into the asset class and kept the many idiosyncratic risk events – from Qatar’s regional isolation to deteriorating relations between Turkey and the US– contained. Picking out the deals of the year for 2017 was not easy for GlobalCapital’s editorial team, but after much deliberation the below were chosen.

CEEMEA Sovereign Deal of the Year

Republic of Ukraine $3bn 7.375% September 2032

BNP Paribas, Goldman Sachs, JP Morgan

In September, Republic of Ukraine made its return to the international markets for the first time since it restructured $15bn of debt in November 2015, in the wake of Russia’s invasion of the Crimea in 2014 that triggered war in eastern Ukraine. Ukraine drew a vast $8.75bn book for its $3bn amortising bond which has an average life of 14.25 years. Bankers called the deal a “blowout”, with it playing to investor demand for duration. The leads had taken advantage of a 200bp tightening in Ukrainian spreads since the IMF agreed the next $1bn tranche of its $17.5bn funding programme in April.

CEEMEA Financial Bond of the Year

Zenith Bank $500m 7.375% May 2022

Citi, Goldman Sachs

Zenith Bank made quick use of strong momentum in the bid for sub-Saharan African debt following the Nigerian sovereign’s market return at the end of March to price a $500m senior trade at 7.375%. The deal was evidence of just how far the market has come given that the last Nigerian bank — Access Bank — to tap the market had to pay a yield north of 10% for a smaller size. The trade also set a good tone for two follow-on trades from United Bank for Africa and Fidelity Bank.

CEEMEA Corporate Bond of the Year

VimpelCom Holdings $1.5bn dual tranche 3.95% June 2021 and 4.95% June 2024

Barclays Capital, HSBC, ING, JP Morgan

VimpelCom, now Veon, took to the markets in June with a view to transforming its capital structure to bring the Russian telecoms company in line with investment grade corporates. Veon therefore bought back all of its operating company bonds, and issued new debt from its holding company. The deal had broad appeal, attracting a good mix of traditional emerging market funds, as well as investors from the high yield sector, and helped bring Russian debt to the corporate mainstream with its positioning of Veon as an investment grade credit. The deal attracted a $4bn book, and both tranches performed well in the secondary market.

Latin America Deal of the Year

Argentina $2.75bn 7.125% June 2117 (re-offered at 90 to yield 7.917%)

Citi, HSBC

Most century bonds are dubbed statement trades, but none have made a statement like this one. Serial defaulter Argentina sold $2.75bn of 100 year bonds in June after attracting $10bn of demand.

Argentina, rated B3/B/B at the time, took markets utterly by surprise, but investors and bankers soon realised that the country had too good an opportunity to turn down: both as a chance to show off its newfound market prowess and to clinch long-term funding at attractive rates.

Exceptionally smooth execution was aided by a re-offer price set at 90 from the outset, and the bond richly rewarded those who took what looked like a brave punt. Considered by some as the ultimate barometer of market perceptions of Argentina, the bond traded as high as 107 later in the year after a strong performance from President Mauricio Macri’s Cambiemos coalition in mid-term primaries.

This was the ultimate headline trade to cap another fine year in Argentina’s comeback under Macri.

By Oliver West, Virginia Furness
02 Jan 2018