Issuer: Telekomunikacja Polska (TPSA)
Announced: December 1998
Amount: $1 billion
Bookrunners: JP Morgan, Salomon Smith Barney
Thanks to the turbulence caused by the Russian crisis, investors' perceptions of emerging markets were low in late 1998 and secondary spread levels had widened a great deal. But this created an opportunity for Telekomunikacja Polska (TPSA). "Our aspirations were realistic at the start; we started roadshowing at $500 million over five years," says Jonathan Brown, emerging market syndicate manager at JP Morgan.
The deal was increased to $1 billion in two tranches—$200 million at five years and $800 million at 10 years—to attract a broad investor base and also to create a yield curve for TPSA. The borrower had obviously pitched the issue at just the right time. "At the end of the roadshow we had over $3 billion of offers in total. As the roadshow continued through the US we struggled to meet demand. Every type of investor was buying from all the major centres."
The TPSA deal was the largest corporate bond ever to be issued from central and eastern Europe. The strategy behind the deal was for TPSA to access the markets efficiently and cost-effectively, and to get a committed investor base.