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... and get ready for more bonds?

Asia's crisis brought bond issuance in central and eastern Europe to an abrupt halt. The region's issuers, tarred with the same brush as south-east Asia, have seen their spreads widen dramatically. So what will tempt investors back? And how long will it take? Robert Minto finds out.

Keep the equity issues coming ...

Since the Asian crisis, bond issuance in central and eastern Europe has been at a standstill. Spreads on outstanding issues have been volatile and have generally widened. The flight to quality has created a very thin market. So who will be able to issue in the year ahead? And who will buy the bonds? So far, the answer is not clear-cut.

The market turmoil has caused a large backlog to build up. Many central and eastern European borrowers cancelled plans to issue bonds in the last quarter of 1997 and their borrowing needs have not yet been met. Extensive borrowing programmes have also been made for 1998 and the funding will have to come from somewhere. According to one banker, there are 170 mandated issues from eastern Europe waiting to come to market. The start of 1998 will be an important time for potential issuers and arrangers to gauge the level of investor confidence.

Estimates of the amount of planned issuance from the region vary. Some $15 billion is known about and analysts reckon that a total of $25 billion could be in the pipeline for 1998.

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