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Special Report: Capital Markets Survey 2014
2014 in CEE/CIS proves rich in risk, relatively poor in reward Guy Norton in Zagreb
2
014 proved to be an extremely testing one for issuers, lead managers and investors in the Central and Eastern Europe/Commonwealth of Independent States (CEE/CIS) region, dominated as it was by the political-economic fallout from the bitter standoff between the US and Europe on the one side and Russia on the other side over the bloody events in Ukraine. Add in one-off fears about the general health of the global economy, the plummeting price of oil, uncertainty over the continued use of quantitative easing and renewed concerns over the fate of the embattled Greek economy, and the capital markets environment in 2014 ultimately proved to be as challenging as when the credit crunch and associated global economic slowdown hit home in 2008-2009. As such issuers, lead managers and investors in CEE/CIS had to have their
wits about them if they were to be successful. Arguably a crystal ball-like ability to read which way the political winds were blowing and having nerves of steel proved to be every bit as important as
mark initial public offering (IPO) at a time of rising chaos in Ukraine paid off for the selling shareholders in Russian supermarket chain Lenta, which yielded the largest equity market issue of
“2014 ultimately proved to be as challenging as when the credit crunch and associated global economic slowdown hit home in 2008-2009� having a strong credit story to tell when it came to capital markets success. Equity According to information supplied by Dealogic, nowhere was that more true than in the equity markets, where the decision to press ahead with a land-
the year from the region. On the basis that fortune favours the brave, bookrunners Credit Suisse, JPMorgan, VTB Capital, Deutsche Bank and UBS were arguably vindicated in their decision to proceed with a deal, which although it just failed to achieve the landmark issue volume of $1bn, did neverthe-
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And the winners are…
bne IntelliNews Best Bank for M&A 2015
Goldman Sachs
bne IntelliNews Best Bank for Equity Capital Markets 2015
Deutsche Bank
bne IntelliNews Best Bank for Debt Capital Markets (Sovereign/Local Authority) 2015
Citi
bne IntelliNews Best Bank for Debt Capital Markets (Corporate) 2015
bne 2015 bneFebruary May 2008
less actually make it to market, which a great number of mooted Russian issues singularly failed to do. Although the share issue that valued the company at $4.3bn was priced at the lower end of the Lenta's indicative price range of $9.5-11.5 per global depository receipt, the deal nevertheless reaped a decent return for the selling shareholders – private equity groups TPG Capital and VTB Capital, alongside the European Bank for Reconstruction and Development (EBRD). And although for most of the year the issuance environment for Russian equity issuers proved to be less than ideal, Russian stock market operator Micex and Qiwi, the operator of Russia’s largest instant payment system, both managed to launch sizeable additional share offerings in 2014 following on from the success of their IPOs in 2013. Elsewhere, new issue activity was fairly limited. However, Georgia’s TBC Bank capitalised on the good reputation of the Georgian banking sector to join Bank of Georgia on the London Stock Exchange with a deal worth $256mn. And after a number of botched privatisation sales, Romanian power company Electrica’s IPO on the London and Bucharest bourses proved a highlight from a country which also spawned
a large number of potential deals from Russia, and the prime issue this year will be whether those offerings can be resurrected if sentiment towards Russia improves. Debt Sentiment in the syndicated loan market in 2014 remained relatively robust for entities from CEE/CIS, with a wide range of borrowers from the region able to secure jumbo-sized transactions. Although with the honourable exception of mobile operator VimpelCom, sizeable syndicated loans from Russia were notable by their absence, but borrowers from other countries tasted success. Sovereigns Bulgaria and Turkmenistan took advantage of improving sentiment towards them to launch landmark deals, while well-known oil and gas companies from the region, including Hungary’s MOL alongside Poland’s PKN Orlen and PGNiG, also secured sizeable transactions with deals that ultimately proved well timed given plummeting commodity prices at the end of the year. As did Turkey’s Star Rafineri, which offered syndicated lenders a relatively rare opportunity to grab a large slice of Turkish corporate risk. On the sovereign Eurobond front, 2014 witnessed some notable successes, with
“The prime issue this year will be whether cancelled equity offerings can be resurrected if sentiment towards Russia improves”
VTB Capital
bne IntelliNews Best Bank for Debt Capital Markets (Financial Industrial Group) 2015
Societe Generale Corporate & Investment Banking
follow-on issues by real estate developer New Europe Property Investments and energy company Romgaz. Finally, towards the end of the year insurer AvivaSa Emeklilik ve Hayat provided some welcome diversification with a relatively rare IPO from Turkey.
Slovenia taking advantage of improving sentiment towards the country after it successfully averted a meltdown by securing close to $6bn in funding, while Poland, arguably the safe haven play of choice in the region, raised just under $7.5bn.
Overall, though, 2014 proved to be a disappointing year on the equity front, principally due to the cancellation of
While other regular issuers such as Hungary, Turkey, Romania and Slovakia all tasted success, the return of Kazakhstan
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to the international bond markets after more than a decade with a $2.5bn issue was undoubtedly one of the highlights of the year. The success of that offering was undoubtedly key to state oil and gas firm KazMunaiGas being able to issue the biggest corporate Eurobond of the year out of CEE/CIS, with the launch of a $1.5bn offering in the wake of the popular sovereign deal. Although both Russian Railways with a brace of deals totalling over $1.4bn and Gazprom with a $1bn equivalent issue were able to access the international bond markets, Russian issuers as elsewhere in the capital markets were largely starved of market access in 2014. Whether that continues in 2015 – and with few signs of the Western sanctions being removed anytime soon, most likely it will – will have a major influence on corporate bond issuance volumes this year. Other issues of note beyond a flurry of benchmark issues from Central Euro-
Special report
pean energy companies from Poland, Slovakia and the Czech Republic included Turk Telekom offering up a rare opportunity for investors to access Turkish corporate Eurobond risk with a $1bn issue. In terms of financial sector issuance, Turkish banks proved to be the pick of
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and Sberbank both raised over $2bn apiece in the first half of the year, the combination of the deterioration in investor sentiment towards Russia and the imposition of sanctions on banks from the country in the second half of the year meant that 2014 once again proved to be a disappointment from a Russian perspective.
"The return of Kazakhstan to the international bond markets after more than a decade with a $2.5bn issue was one of the highlights of the year" a bunch, launching a series of wellreceived transactions from well-known and respected lenders such as Garanti Bankasi, which kicked off the bank funding party for the country’s lenders with a $750mn deal in April. While Russian banking titans Gazprombank
That ultimately proved to be the principal leitmotif in the capital markets in CEE/CIS in 2014, and the multi-billion-dollar question this year is whether that theme will be reversed or not. Only time will tell.
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Rankings
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Special report
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Deals 2013 v 2014 Central and Eastern Europe M&A Advisor Rankings
2014
2013 v 2014 Central and Eastern Europe M&A Advisor Rankings
Full Year 2013
Rank
All Advisor Parent
1
Goldman Sachs
2 3
Deal Value $ at
No.
%share
Pricing Date
31,896
24
18.8
Barclays
24,375
18
14.4
JPMorgan
20,807
14
12.3
No.
%share
Rank
All Advisor Parent
15,848
11
16.2
1
VTB Capital
Deutsche Bank
14,209
14
14.5
2
Morgan Stanley
13,380
8
13.6
3
Announcement (m)
Deal Value $ at Announcement (m)
2013 v 2014 Central and Eastern Europe ECM Bookrunner Rankings 2014
Issuer Name Deal Nationality
28.02.14
Total Value $ Incl NonDeal (m) 974
Lenta Ltd
Russian Federation IPO
28.02.14
637
CEZ
Czech Republic
Convertible Utility & Energy
27.02.14
604
Electrica SA
Romania
IPO
Full Year 2013
Rank Bookrunner
Deal Value ($m)
No. %share
Rank
Bookrunner
Deal Value ($m)
No.
%share
1
Deutsche Bank
840
8
11.7
1
Citi
3,088
12
13.5
2
SG Corporate & Investment Banking
580
6
8.0
2
Goldman Sachs
2,349
10
10.3
3
UBS
506
6
7.0
3
VTB Capital
2,250
7
9.8
2013 v 2014 Central and Eastern Europe Syndicated Loans Bookrunner Rankings 2014
Full Year 2013
Rank Bookrunner
Deal Value ($m)
No. %share
Rank
Bookrunner
Deal Value ($m)
No.
%share
1
ING
2,701
24
4.0
1
Citi
3,820
20
3.3
2
UniCredit
2,193
18
3.3
2
BNP Paribas
3,670
19
3.2
3
SG Corporate & Investment Banking
1,756
12
2.6
3
Deutsche Bank
3,426
13
3.0
2013 v 2014 Central and Eastern Europe Syndicated All Total DCM Bookrunner Rankings 2014 Deal Value $
No. %share
Rank
Bookrunner Parents
(Proceeds) (m)
Deal Value $
No.
%share
(Proceeds) (m)
1
Citi
10,552
40
10.5
1
VTB Capital
17,661
121
10
2
JPMorgan
9,432
29
9.4
2
Deutsche Bank
15,317
53
8.7
3
SG Corporate & Investment Banking
6,499
39
6.5
3
Gazprombank
14,252
73
8.1
2013 v 2014 Central and Eastern Europe Syndicated All Sovereign and Local Authority DCM Bookrunner Rankings 2014
Full Year 2013
Rank Bookrunner Parents
Deal Value $
No. %share
Rank
Bookrunner Parents
(Proceeds) (m)
Deal Value $
No.
%share
(Proceeds) (m)
Credit Date
Deal Value ($m)
Borrower
Deal Nationality
25.04.14
2,765
PKN Orlen SA Poland
11.06.14
2,500
29.05.14
2,424
KGHM Polska Poland Miedz SA Slovak Gas Slovak Republic Holding BV
Citi
6,801
13
13.8
1
Deutsche Bank
8,478
16
17.2
2
JPMorgan
6,595
12
13.4
2
BNP Paribas
4,617
9
9.3
3
HSBC
4,699
9
9.6
3
HSBC
4,015
8
8.1
Deal Pricing Date 10.02.14
No. %share
Rank
Bookrunner Parents
(Proceeds) (m)
Deal Value $
No.
%share
1
VTB Capital
2,306
11
11.2
1
Gazprombank
10,467
48
12.9
2
Citi
2,041
14
10.0
2
VTB Capital
8,240
51
10.1
3
JPMorgan
1,490
9
7.3
3
Sberbank CIB
7,158
51
8.8
2013 v 2014 Central and Eastern Europe Syndicated All FIG DCM Bookrunner Rankings Full Year 2013
Rank Bookrunner Parents
Deal Value $
No. %share
Rank
Bookrunner Parents
(Proceeds) (m)
Deal Value $
Bookrunner Parent
Investment Oil & Gas Grade Leveraged Mining
Private sector industrial
Mitsubishi UFJ Financial Group, ING, UniCredit
Private sector industrial
Leveraged
Private sector utility
BNP Paribas, Citi, Credit Agricole CIB, HSBC, ING, Intesa Sanpaolo SpA,PKO BP, SG Corporate & Investment Banking, Santander, UniCredit
Utility & Energy
Citi, RBS, SG Corporate & Investment Banking, UniCredit
Deal Type
General Industry Issuer Type
Deal Bookrunner Parent
3,500
Slovenia
Sovereign,
Government
Central government
JPMorgan, Goldman Sachs, Barclays
01.04.14
Government
Central government
HSBC, Barclays, SG Corporate & Investment
08.01.14
Government
Central government
2,753 2,725
Republic of Slovenia Republic of Slovenia Republic of Poland
Local Authority
Slovenia
Sovereign, Local Authority
Poland
Sovereign,
Banking, Commerzbank Group, UniCredit
Local Authority
BNP Paribas, SG Corporate & Investment Banking, Citi, UniCredit
2014 Top Syndicated Corporate Deals from Central and Eastern European Issuers Deal Pricing Date 31.10.14
Deal Value Issuer $ (Face) (m)
Deal Nationality
Deal Type
General Industry Issuer Type
Deal Bookrunner Parent
1,500
Kazakhstan
Corporate Bond-Investment-Grade Corporate Bond-Investment-Grade Corporate Bond-Investment-Grade
Oil & Gas
Public sector industrial
Oil & Gas
Public sector industrial
Telecommunications
Private sector industrial
UBS, Deutsche Bank, Credit Suisse, Citi JPMorgan, Gazprombank, Credit Agricole CIB JPMorgan, Deutsche Bank, BNP Paribas, Barclays, Emirates NBD PJSC
National Co Kaz
19.02.14
1,029
Gazprom OAO
Russian Federation
13.06.14
1,000
Turk Telekomu-
Turkey
2014 Top Syndicated FIG Deals from Central and Eastern European Issuers
(Proceeds) (m)
2014
General Industry Borrower Type
Deal Nationality
Full Year 2013 Deal Value $
Utility & Energy
London, Moscow (MICEX) Credit Suisse, JPMorgan, VTB Capital, Deutsche Bank, UBS Budapest Barclays, Deutsche Bank, HSBC, SG Corporate & Investment Banking Bucharest, London Citi, Raiffeisen Bank International AG, SG Corporate & Investment Banking
Deal Value Issuer $ (Face) (m)
2013 v 2014 Central and Eastern Europe Syndicated All Corporate DCM Bookrunner Rankings Rank Bookrunner Parents
Retail
Bookrunner Parent
2014 Top Syndicated All DCM Deals from Central and Eastern European Issuers
nikasyon AS
2014
Deal Type
MunaiGas ZAO
1
General Industry Exchange
2014 Top Syndicated Loans from Central and Eastern European Issuers
Full Year 2013
Rank Bookrunner Parents
Deal Type
No.
%share
Deal Pricing Date 26.06.14
Deal Value Issuer $ (Face) (m)
24.06.14
1,356
19.02.14
1,000
1,362
Deal Nationality
SG Corporate & Investment Banking
2,167
20
8.5
1
VTB Capital
4,729
32
15.4
2
Citi
1,611
12
6.3
2
JPMorgan
2,153
19
7.0
3
Gazprombank
1,577
8
6.2
3
Gazprombank
1,956
10
6.4
General Industry Issuer Type
Gazprombank Russian Federation Corporate Finance Bond-InvestOAO ment-Grade Sberbank of Russian Federation Corporate Finance Bond-InvestRussia OAO ment-Grade Sberbank of Russian Federation Corporate Finance Bond-InvestRussia OAO ment-Grade
(Proceeds) (m)
1
Deal Type
Information supplied by Dealogic.
Private sector bank
Deal Bookrunner Parent
Deutsche Bank, SG Corporate & Investment Banking, Credit Suisse, Gazprombank
Public sector bank
Deutsche Bank, BNP Paribas, Barclays, Sberbank CIB
Public sector bank
Deutsche Bank, Credit Suisse, Bank of America Merrill Lynch, Sberbank CIB