Page 63 - bne_Magazine_July_2017

bne July 2017 New Europe in Numbers I 63
Foreign investors return to CEE bonds
bne IntelliNews
Bond markets in emerging Europe
are seeing good pick up of new issues by international investors. Russia in particular has doubled the number
of foreign investors, who now hold a record 29% of all local sovereign bonds outstanding; Gazprombank calculates that foreign investors bought 80% of the new issues in the first quarter of this year. The number of issues doubled y/y to 28 in the first four months of
this year, worth $12.3bn, according to Cbonds.
And there is more to come. The pres- sure on the Russian federal budget has eased to the point where the Ministry of Finance can cover the estimated 1.9% GDP deficit this year largely by issuing RUB1 trillion ($17.6bn) of local sover- eign debt – twice as much as last year – as well as at least $3bn of Eurobonds on the international capital market. However, with inflation falling and the Central Bank of Russia expected to
cut rates again several times this year (the monetary policy rate was 9.25% in June) the appeal of Russia’s domestic sovereigns may start to wane this year.
Issues by the countries of Central and Eastern Europe are also up by a fifth year on year with 43 issues worth a total of $29bn. The biggest issue was
a 20-year Turkish sovereign bond worth $1.75bn that yields 5.75%, as well as $750mn 10-year bond with a yield of 6.125% by Garanti Bank, one of Turkey’s biggest banks. Finansbank, another Turkish bank, also issued a $750mn 5-year bond with a 4.875% yield. Lithu- ania was the only other issuer from the region with two sovereign bonds worth €750mn and €550mn, with a 20-year and 10-year maturity respectively.
Russia: Volume of new issues, $mn
CIS: Volume of new issues, $mn
CEE: new bond issues $mn
Source: CBonds
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