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Capital Markets

Corporates face long shadow of Ukraine

The crisis in Ukraine shows no sign of abating and its impact is being felt across the rest of emerging Europe. Phil Bennett, deputy head of the European Bank for Reconstruction and Development, explains why this is bad news for the region’s companies and what multilaterals can do to help.

For emerging Europe’s top companies, there has probably never been a better time to raise funding. Rates are at record lows, banks are liquid and willing to lend, and bond buyers are cash-rich and on the hunt for yield pick-up.

“They have the best of all worlds,” says Phil Bennett, first vice president at the European Bank for Reconstruction and Development (EBRD). “They have more access than they need to local banks, who are scrambling to acquire good quality corporate assets, and to a certain extent they also have access to capital markets, both domestic and international.”

But if life is good for the region’s blue chips, below the top rank a very different picture emerges – one that is of deep concern to the EBRD, with its mandate to promote development and transition in the former Communist countries.

Although many companies in the region say they are confident ample financing is available to them, Bennett knows the challenges are deep-rooted.

“Smaller and mid-cap companies are struggling to secure bank finance and don’t have the luxury of capital markets access,” he says. “The blue chips clearly have multiple funding options but the others have fewer than before, not only in terms of size and types of funding, but also in terms of maturity.”

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