The biggest bank restructuring deals in emerging Europe reached an estimated USD21.7bn on 27 October, according to research by Debtwire.
BTA Bank led the top ten live, completed and expected bank restructurings in emerging Europe this year with a USD10.3bn restructuring, which will encompass Eurobonds, syndicated and bilateral loans and local-currency bonds.
The company was followed in second place by Alliance Bank, with a USD4.2bn restructuring, Nadra Bank (USD2.1bn), Alfa Bank Ukraine (USD1.05bn) and Parex banka (USD1.01bn).
In March 2009, Parex banka became the first financial institution in the region to restructure its debts when it rescheduled two syndicated loans worth USD1.01bn.
Speaking at Debtwire’s annual European forum, Stewart Wakeman of Mizuho Corporate Bank said: “Parex, the number two bank in Latvia, was a problem to some extent created because the Swedish government guaranteed its domestic banks worldwide deposits. Parex depositors simply withdrew their money, went across the road and placed them with Parex’s Swedish competitors. The Latvian government’s swift response was to nationalise, a strategy which though unclear initially comforted the creditors.”
Since Parex, several banks and finance houses in Kazakhstan and Ukraine have approached their foreign and domestic creditors to cut their debt burdens or try to exchange old debts for new.
The forum also explored what is next for the CLO and how to address the tricky subject of reinventing the asset backed security to an appealing format post-crisis.
Greg Branch of SCIO Capital suggested a return to a simpler and more transparent CLO structure, where “structural enhancements resulting from lessons learned during the crisis” are incorporated. Philippe Jodin of Alegra Capital admitted that “having more assets rated CCC in the portfolio is not necessarily of concern if you hold original AA, A or BBB rated tranches of a CLO, as it will help protect your position. Subordinated holders are obviously upset when they feel that rating agencies downgrade too many ‘boarder line’ credits to CCC.”
