Central and eastern European issuers are likely to find accessing the international bond markets a challenging experience in the coming months given the continued US-inspired global liquidity squeeze. Speaking at Euromoney’s conference on central and eastern Europe in Vienna, Fokion Karavias, general manager of the global markets division at Greece’s EFG Eurobank, says that on the back of a general flight to quality from emerging towards developed markets all borrowers will face tougher market conditions but that government borrowers should find it easiest to issue. "Sovereigns will need to pay much higher spreads, but they will be able to issue," says Karavias, adding that even potential Euromarket debutantes such as Albania and Azerbaijan could get maiden issues away if they are prepared to pay the higher market clearing levels being demanded by investors.
Marko Skreb, chief strategist at Croatia’s Privredna Banka Zagreb, says that those countries in the region that can show the best record on fighting inflation and current account deficits – both of which are generally on the rise across central and eastern Europe – should fare best in the risk-averse climate and should be rewarded with tighter pricing and higher investor demand for any debt issuance.