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Capital Markets

CEE corporate bond issuance: Disintermediation begins to take root

With a seemingly bottomless pool of cheap bank funding readily available, companies in emerging Europe have tended to shun the international bond markets. A recent spurt of debut deals, however, has prompted speculation that the long-awaited shift might finally be under way.

There are few regions, developed or emerging, where corporate borrowers seem more immune to the charms of the Eurobond markets than emerging Europe. Time and again, over the past decade, optimistic bond bankers have hailed the arrival of disintermediation in the region, only to be disappointed as firms reject the debt capital markets in favour of a flood of cheap funding from highly liquid local banks.

Experience has been unable to prevent hopes of a move into bonds lingering on, however. This summer they were revived once again when a clutch of central and eastern European companies made their global debt capital market debuts within weeks of each other. Kicked off by Polish energy utility PGE at the start of June, the wave of inaugural issuance also included deals from Slovakian gas distributor SPP, Slovenian energy firm Petrol and Czech gas pipeline operator Net4Gas, as well as two more Polish names, oil refiner PKN Orlen and insurer PZU.

Magdalena Bartos, chief financial officer at PGE
 The more choice of funding sources we have, the more flexibility we have in negotiating with banks on loan financing

Magdalena Bartos


In less than two months, more new corporate borrowers from emerging Europe entered the Eurobond market than in the whole of the previous two years, while the total deal volume of €2.5

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