LONDON, April 4 (IFR) - Debutante and infrequent borrowers
dominate the bulging CEEMEA bond pipeline as new names seek to
take advantage of propitious issuance conditions.
This week, AKLease, Exillon Energy, Eurasia Drilling and
Sekerbank have all announced their intention for debut issues
(Sekerbank has printed a covered bond before but never a senior
unsecured transaction). They join Kazakh railroad operator
Eastcomtrans, which is also poised to make its first foray into
the international bond markets.
The rumour mill, too, is filled with potential first-time
borrowers, including Polyus Gold, Nordgold and Koc Holding.
"It's a simple case of price compression and risk appetite.
The needle has moved to a point where investors are crying out
for something different," said Nick Darrant, head of CEEMEA debt
syndicate at BNP Paribas.
That these potential issuers, many of which are lowly rated,
feel able to tap fixed income investors is a sign of how quickly
the market is changing. The region is developing in the same way
that Asia and Latin America have already done so, as private
sector corporates become a growing and profitable chunk of the
"It's the next phase in the evolution of our market," said
William Weaver, head of CEEMEA debt origination at Citigroup.
"We are gradually seeing a market where we are getting true
high-yield names and therefore the double whammy of emerging
markets and high-yield risk in the same transaction."
As well as attractive pricing, bankers say the tail-off in
lending is another reason why corporates are increasingly
turning to the bond market.
"It's the continuing rebalancing from the bank market to
debt capital markets. Corporates are not necessarily taking on
new debt. But treasurers who didn't look at this space are now
clearly considering this funding option," said one origination
official at a European bank.
While first-quarter loan volumes in the CEEMEA region, at
US$29.5bn, were up 19% year-on-year, they were still
significantly less than the US$55bn raised in the region's bond
market over the same period.
Whether all these new names print successful transactions
remains to be seen, however. Earlier this year, one potential
debutante, RusPetro, postponed its proposed offering after
announcing initial price thoughts as investors became unnerved
by some poor financial results.
But in an environment where rates remain at historical lows,
and the search for returns is intensifying, issuers that offer
investors the chance to pick up yield and gain from possible
spread compression should be attractive.
The flurry of debut issuance is just one strand of what is
expected to be one of the busiest ever months in CEEMEA, with a
wide variety of borrowers likely to be in the market from
sovereigns to banks to corporates, rated from Double A to Single