The European Bank for Reconstruction and Development (EBRD) has announced its support to a €40mn issuance of commercial paper (CP) by Maxima, the largest grocery retailer both in Lithuania and the entire Baltics. The deal marks the first issuance of such securities in the Baltic region.

Under the deal, the EBRD is investing €4.2mn in the €40mn issuance of commercial paper by Maxima.

The notes were subscribed by institutional investors from the Baltic states, Scandinavia as well as the United Kingdom and other European countries. This is the first commercial paper transaction under such a format in the Baltic region.

“The successful completion of the offering underlines the company's high credit quality and intention to diversify our funding sources. Continuous cooperation with such large international players like the European Bank for Reconstruction and Development, Nordic Investment Bank and others and their trust in our company is very important for us,” said Mantas Kuncaitis, CEO and Chairman of the Board of Maxima Grupe.

Maxima is the largest food retail group in the Baltics as well as the largest employer and second largest corporate in Lithuania. In 2018, the EBRD supported the company’s first issuance of a €300mn public bond.

“We are very pleased to support this groundbreaking issuance and look forward to continue our successful cooperation with Maxima Grupe”, added Ian Brown, EBRD Head of the Baltics.

The EBRD’s support comes under the bank’s new €75mn Commercial Paper Framework which aims at developing the market for tradeable paper to be issued by non-financial Baltic firms to address corporate financing needs and mobilise investment funds from institutional investors.

Commiercial papers are short-term unsecured notes issued by companies with a fixed-term maturity and used to address short-term liquidity or working capital needs. Demands for such alternative sources of finance are rapidly increasing in face of the current coronavirus pandemic.

The EBRD is working with the central banks of Estonia (Eesti Pank), Latvia (Latvijas Banka) and Lithuania (Lietuvos Bankas) as well as the Nordic Investment Bank (NIB) on the establishment of the pan-Baltic commercial paper market. A memorandum of understanding sets out the principles in line with the best practices outlined by the European Central Bank (ECB).

The EBRD has been actively involved in the development of capital markets in the three Baltic states and, in 2018 together with the European Commission, sponsored the signing of a memorandum of understanding between Estonia, Latvia and Lithuania to create a pan-Baltic capital market to strengthen their economies and stimulate investment to create jobs.

The EBRD has been investing in the Baltic states since 1991. To date, the Bank’s total investment there stands at more than €2.6bn through almost 300 projects.