Romania, Ukraine May See Strong Eurobond Demand After Czech Sale Yesterday

Romania and Ukraine will likely face “strong” demand for their planned Eurobond offerings after the Czech Republic raised euro-denominated debt in an oversubscribed issue, Credit Agricole Cheuvreux SA said.

The Czech sale of 2 billion euros ($2.56 billion) of bonds yesterday drew 5.3 billion euros in bids as planned deficit cuts and optimism about emerging-market debt sent the country’s borrowing costs below those in higher-rated Italy. It was priced to yield 105 basis points more than the benchmark mid-swap rate.

“This essentially paves the way for more Eurobond issuance out of the region, with Romania and Ukraine likely to face strong demand, too, but obviously at a higher yield,” Simon Quijano-Evans, head of emerging-market strategy at Cheuvreux in Vienna, wrote in a report to clients today.

Ukraine may sell Eurobonds this year if investors accept yields of less than 7 percent for seven-year maturities, Prime Minister Mykola Azarov said last week. Romania aims to raise at least 1 billion euros in international markets, Finance Minister Sebastian Vladescu said on Aug. 26.

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

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