The bond markets of Central and Eastern Europe (CEE) made a robust start to the new year with $5.8bn of issues in Central Europe, well ahead of the $0.39bn issues in January 2017. Russia also made a good start with $2.2bn of bond issues, on a par with the $2.3bn it issued in the same month a year earlier.
The biggest bond issued in CEE was a Turkish sovereign dollar-denominated bond worth $2bn that matures at the end of January 2030 and bears a yield of 5.75%. The lead managers of the placement were Citigroup, Deutsche Bank and HSBC. Some 35% of the bonds were sold to investors in the UK, 25% to investors in the US, 15% to investors in other European countries and 15% to buyers in Turkey.
Macedonia also got a seven year €500mn sovereign bond away to strong demand that drove the yield down to a historic all time low of 2.75%, as bne IntelliNews reported.
The issue will be an encouraging sign for other sovereign issuers in the region as 2017 was marked by several exotic bond issues that were very well received by the market – with issues by Ukraine, Belarus and Turkmenistan standing out.
This is the sixth Eurobond issue placed so far by Macedonia’s finance ministry with the lowest interest rate so far. For comparison, the interest rates on the previously issued five Eurobonds ranged between 3.975% and 9.875%.
“This is historically the lowest interest rate of the Eurobonds issued so far by the finance ministry, reflecting the extremely high confidence among international investors,” the ministry said in a statement.
All the other major commercial CEE issuers were Turkish including: Petkim Petrokimya Holding, which produces and sells petrochemical products in Turkey and internationally and issued a $500mn five year bond; investment bank Turkiye Sinai Kalkinma Bankasi, which specialises in industrial investments, energy and resource efficiency, environmental protection investments, renewable energy, tourism, education and health investments; and Vakifbank, the fifth largest bank in the country.
CEE Issue |
Currency |
Volume (m.) |
Lead Managers |
Turkiye Sinai Kalkinma Bankasi, 5.5% 16jan2023, USD |
USD |
350 |
Commerzbank, ING, SMBC Nikko Capital and others |
Macedonia, 2.75% 18jan2025, EUR |
EUR |
500 |
Citigroup, Deutsche Bank, Erste Group |
Petkim Petrokimya Holding, 5.875% 26jan2023, USD |
USD |
500 |
Citi, Goldman Sachs, JP Morgan, Societe Generale, VTB Capital |
Vakifbank, 5.75% 30jan2023, USD |
USD |
650 |
Emirates NBD, First Abu Dhabi Bank, UniCredit and others |
Turkey, 5.125% 17feb2028, USD |
USD |
2000 |
Citigroup, Deutsche Bank, HSBC |
The Russian issuers were all commercial as companies tap the market while the benign conditions from last year spill over into the new one.
Polyus Gold issued two bonds, a three-year $250mn bond and perpetual $500mn bond. Aluminium producer Rusal was also in the market with a $500mn bond, together with fertiliser producer Phosagro, and Alfa Bank, one of the top three largest commercial banks in Russia.
PhosAgro, one of the world’s leading vertically integrated phosphate-based fertiliser producers, used the money raised from its bond to retire its debut 5-year, $500mn Eurobond issued in February 2013 with a 4.204% coupon. The redemption was financed by the company’s new 5.25-year, $500mn Eurobond placed in January with a coupon of 3.949%, “which is among the lowest rates achieved by Russian issuers”, the company said.
PhosAgro CEO Andrey Guryev commented: “This placement represents a new benchmark for the company, enabling us to lower the average interest rate and significantly improve the structure of our debt portfolio. We saw strong demand from international investors during the deal, with over 90% of the orders coming from American and European investors. We were happy to see major international funds and banks participating in this placement.”
Russia Issue |
Currency |
Volume (m.) |
Lead Managers |
Polyus, 1% 26jan2021, USD (Conv.) |
USD |
250 |
Deutsche Bank, JP Morgan, Sberbank CIB |
Phosagro, 3.949% 24apr2023, USD |
USD |
500 |
BofAML, Citi, JP Morgan, RBI Group and others |
Polyus, 4.7% 29jan2024, USD |
USD |
500 |
Gazprombank, JP Morgan, Renaissance Capital, Sberbank CIB, VTB Capital |
Alfa Bank, 6.95% perp., USD |
USD |
500 |
Alfa Bank, UBS |
RUSAL Plc, 4.85% 1feb2023, USD |
USD |
500 |
Credit Bank of Moscow, Sberbank CIB, Sovcombank, VTB Capital and others |
All-in-all the outlook for emerging markets (EM) bond markets this year is good as the CEE region booms and the CIS is also growing, albeit at more modest rates.