CEE monthly bond wrap: summer slowdown is here

CEE monthly bond wrap: summer slowdown is here
bond issues slowed, but still head of last year
By Ben Aris in Berlin August 4, 2017

The summer slowdown is here with bond issue volumes dropping off across the Central and Eastern Europe (CEE) region but still way ahead of last year’s results.

In Central Europe a total of $1.5bn new bonds were issued by only three entities: the Lithuanian power company Lietuvos Energija with a €300mn bond and two Polish banks Odea Bank and PKO Bank with $300mn and €750mn respectively. However, combined this was still about $500mn more than was issued a year ago in the same month, according to Cbonds data

Bond issues in the Commonwealth of Independent States (CIS) also fell month on month from $7.25bn in June, which was abnormally high, to $1.9bn in July, which was on a par with the same month a year earlier ($1.85bn). The only non-oil issue was by Nostrum Oil & Gas, an independent oil and gas producer working in the Caspian basin that issued a 5-year $750mn bond with a 8% yield.

Russia continues to dominate the bond issues in the CIS with five out of the total six issues carried out by Russian entities.  In all, a total of $1.9bn bonds issued by CIS companies of which $1.2bn were issued by Russian entities. Russia has been actively issuing bonds in the first half of the year well in excess of last years levels. Russian comapanies have returned to grace to an extent and tapping international capital markets for longer and cheaper money than they can get at home it has depressed domestic corporate lending, causing a problem for local banks. Comparing the rising number of bond issues from Russian since 2016 and the trend closely mirrors the fall in corporate lending starting in February 2016. 

It is maybe then no surprise that Russian banks lead the issues and are going back to the international bond markets to raise longer, cheaper money in order to on-lend to local clients at more competative rates. Russia’s leading commercial bank Promsvyazbank was the biggest issuer by far with a $500mn perpetual bond with yield of 8.75%. But interestingly there was two issues by new kid on the Russian financial block, BCS, a young brokerage that is growing fast, of $4.5mn and $10mn with yields of 5.5% and 4.75% maturing in 2022 and 2023 respectively. Most of Russia’s investment banks and brokerages have been killed off by the decade-long crisis (except the two state-owned behemoths of VTB Capital and Sberbank CIB) but BCS seems to have found a niche with corporate finance, high volume trading and other services. The bonds will fund its further expansion.

CEE

Top issues in July 2017

 

 

 

Issue

Currency

Volume (m.)

Lead Managers

Lietuvos Energija AB, 2% 14jul2027, EUR

EUR

300

BNP Paribas, SEB

Odea Bank AS, 7.625% 1aug2027, USD

USD

300

BofAML, JP Morgan

PKO Bank Polski, 0.75% 25jul2021, EUR

EUR

750

Banco Santander, BNP Paribas, Citigroup, Goldman Sachs


 

CIS

Top issues in July 2017

 

 

 

Issue

Currency

Volume (m.)

Lead Managers

Mikro Kapital, 11% 3jul2022, EUR (ECP)

EUR

0,5

Valartis Bank

BCS, 5.5% 31oct2022, USD

USD

4,5

BCS

BCS, 4.75% 30jun2023, USD

USD

10

BCS

Promsvyazbank, 8.75% perp., USD

USD

500

Gazprombank, Promsvyazbank, RBI Group, Renaissance Capital

Nostrum Oil & Gas, 8% 25jul2022, USD

USD

725

Banca IMI, Citigroup, Deutsche Bank, VTB Capital


 

Russia

Top issues in July 2017

 

 

 

Issue

Currency

Volume (m.)

Lead Managers

Mikro Kapital, 11% 3jul2022, EUR (ECP)

EUR

0,5

Valartis Bank

BCS, 5.5% 31oct2022, USD

USD

4,5

BCS

BCS, 4.75% 30jun2023, USD

USD

10

BCS

Promsvyazbank, 8.75% perp., USD

USD

500

Gazprombank, Promsvyazbank, RBI Group, Renaissance Capital




 

Data

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