Press about us

20 December 2021

Liability-management and ESG to dominate 2022, as eyes remain on interest rates – CEE and CIS 2022 Bond Outlook

by Tomas Cutts and Mariam Meskin

Primary activity across CEE and CIS in 2022 is set to be slightly down on this year, but as usual sovereigns will be the first issuers out of the starting blocks in the new year, according to market participants.

Participants though were unable to predict how active sovereigns would still be, with activity from this issuer group also likely to be lower than in previous years.

Over the past couple of years there has been a lot of sovereign issuance versus historical figures, largely because of the coronavirus pandemic and related spending, one banker said.

However, a lot of the issues surrounding the pandemic are now ending, pending new variants, so there is likely to be less sovereign activity going forward, the banker added.

Sovereign issuance is usually front loaded, with borrowers such as Romania, Hungary and Poland all coming to the market early in the year, but we do not know how these issuers will react with rate hikes looming, a second banker said.

A November poll by Reuters predicted the US Federal Reserve would raise interest rates by 25bps in the fourth quarter next year.

In CIS, the situation is more complicated for many of the region’s sovereigns, the second banker continued.

Belarus’ access to the international capital markets has been curtailed, whilst Russia’s has been limited. Ukraine still has access to the markets, but the country’s bonds remain under pressure from ongoing tensions along the country’s eastern border.

Belarus has no other option than to go to Russia to deal with its USD 800m 6.875% 2023 maturity, a third banker said. “This will be a political decision.”

That being said, other CIS-based sovereigns could still come to market.

A fourth banker noted that the Government of Uzbekistan could return to the market in the second half of next year.

The sovereign was last in the market in July with a USD 635m 3.9% long 10-year and UZS 2.5trn (USD 231m) 14% three-year bond, which it priced at par.

Non-sovereign issuance

Although there could be some delayed issues coming to the market earlier in the new year, most market participants expected activity to really pick up around the end of the first quarter.

The National Bank for Foreign Economic Activity of the Republic of Uzbekistan’s (NBU) US dollar and Uzbek som-denominated Eurobond could make an early appearance, having been postponed this year, the third banker said.

In general, though, the CIS pipeline consists mostly of Russian borrowers, a fourth banker noted, with both he and the third banker adding that this includes a number of metals and mining names.

Frequent issuers such as Gazprom and Russian Railways are also likely to be back in the market with non-standard hard currency deals, but there could also be deal flow from Ukraine, the third banker said.

“Although yields in Ukraine are high, the market is open for such borrowers despite the tensions with Russia.”

Ferrexpo, a commodity trading and mining business with operations in Ukraine, is one such company considering the bond market, following a long hiatus.

There could also be one or two deals from Kazakhstan next year, and although there is nothing imminent yet from Uzbekistan-based gold and uranium miner Navoi Mining and Metallurgical Combinat (NMMC), there could be something from the borrower in the second half of next year, the fourth banker noted.

NMMC is working on a bridge-to-bond facility, and Debtwire reported last month that ferrous, non-ferrous and ferroalloys materials producer Uzmetkombinat is also eyeing the Eurobond market in 2022.

There is also already one mandate out for a Kazakhstan-based borrower, a fifth banker noted.

“I think we will see a steady stream of deals from the region right from the outset of 1Q22. We see a positive backdrop on both the debt and equity markets in 2022 – we expect to see similar levels of issuance as in 2021,” said Alex Metherell, co-head of global banking at VTB Capital.

“However, there is a lot of messaging around central bank tapering and tightening monetary policy, which will have an impact on issuance trends," he continued. "The market is waiting for a central bank to make an overt move on a rate decision, but no-one wants to jump the gun. Although that uncertainty may slow things down in initial weeks, from a 12-month perspective it will not materially change the trajectory of quantity of issuance.”

Return for refis

Market participants remain undecided on how much new-money issuance there will be in the new year, but all agree that liability- management exercises will constitute a large part of any market activity in 2022.

There are a lot of corporate redemptions coming up, the first banker noted. “There were a lot of five-year deals placed in 2017, which was a busy year, and now these deals are coming due.”

The third banker agreed with the first, noting that although there have been a large number of refinancing exercises already, there is still scope for more.

“It is still advisable to tackle late 2022 and 2023 maturities as time flies, and 2023-maturing debt is only just around the corner,” the third banker said.

“We expect more consumer-oriented issuers to tap capital markets in 2022 – there are also a lot of “maturity curves” approaching re- issuance windows in the next 12 months; and there is a supportive market to replace those financing requirements,” said Metherell.

Refinancing exercises are likely to eclipse other types of deals next year.

“There has been little increase in capex plans among corporates for a number of years now, so I doubt there will be a lot of new money deals next year,” the first banker said.

But others expect there will still be different types of issuance.

“We believe that there will be more M&A activity in 2022, which will flow through to the debt markets. We are expecting some interesting transactions in the natural resources space. Due to where we are in the commodity cycle and how supportive margins are, we may begin to see cross-border commodity M&A,” Metherell said.

“There are also opportunities for consolidation in the home and retail consumption space, both of which grew quickly in the last year. That has put companies in a position to do sensible M&A and create moats around existing business structures,” he added.

Usual suspects or debuts?

Still, the number of liability management exercises in 2022 is likely to be down year-on-year, and we are also unlikely to see any more debut deals than the market saw in 2021, according to the second banker.

Most issues next year will be from the usual suspects, and although there could be some debut issues later in the year, there are unlikely to be any in 1Q22, the fourth banker noted.

Given that the Russian ruble-denominated market is not attractive at the moment as rates are nearing the top of the rate hike cycle, the third banker noted that he was pushing borrowers that would not normally do hard currency deals to look at the Eurobond market, where rates remain good.

“[International] interest rates do appear set to rise, but they will rise from a low base, so there is still scope for borrowers to lock in lower interest rates,” the first banker noted.

In October the Central Bank of Russia hiked the key rate by 75bps to 7.5%, with the next rate review to be held later this week on 17 December.

Although pushing domestically-focused borrowers to the international markets could lead to FX risks, this is manageable for many Russian borrowers, the second banker said.

Watching the clock

The expectation of rising inflation and interest rates are likely to drive borrowers to the market earlier in the year rather than later, market participants noted.

Most borrowers will wait to see what happens in January before making issuance plans, according to the fourth banker.

But the second banker said that borrowers are likely to try to get out into the market earlier, meaning there will be more activity in the first half of next year.

“With US Treasuries expected to rise, it makes sense to issue earlier than later next year. There is no sense in delaying,” the third banker agreed.

Whilst this year was the year of easy money, according to the fifth banker, 2022 is looking to be a slightly tougher environment.

“There was a benign issuing environment last year, and everyone issued. Even all the lower tier Russian banks did subordinated deals,” the fifth banker said.

“The market will still be open next year, but borrowers will have to time their placements much better and will have to be prepared to pay a little more. Portfolio managers will be much more selective,” the banker continued.

ESG on the rise

Green bonds proved popular in 2021, and the ESG trend is only set to continue to grow in strength next year, according to the third banker.

“A lot of borrowers are looking at doing debut ESG deals next year. We are in informal discussions with many, but there are no mandates yet.”

The second banker noted that borrowers are taking ESG seriously and are doing dedicated ESG roadshows and hiring dedicated ESG teams.

“We expect to see financial institutions and corporates try ESG- linked facilities next year, which we have so far seen in the loan market but not yet the bond market,” the second banker concluded.

Corporate Communications VTB Capital

The information and opinions contained within VTB Capital research reports are prepared by research analysts associated with JSC VTB Capital, VTB Capital plc and their non-U.S. affiliates (each such entity, a “VTB Group entity,” and all such entities collectively, the “VTB Group”). The information, analytic tools, and/or models referenced herein (and any reports or results derived from their use) are intended for informational purposes only. VTB Capital has no obligation to update this information and may cease provision of this information at any time and without notice. The information and opinions described herein may be based on VTB Capital research reports that have already been published and made available to research customers. Accordingly, members or clients of the VTB Group may have acted upon or used the information or conclusions contained in this research report, or the research or analysis on which they are based, before its publication.


This material does not constitute nor is it intended as an offer, inducement, promotion or solicitation for the purchase or sale of securities, investments or other financial instruments. Neither the information contained in the report nor any future information made available with the subject matter contained in the report will form the basis of any contract. This material is not intended to constitute an investment recommendation as defined by Article 3(1) (35) of Regulation (EU) No 596/2014, and related rules and regulations (each as amended). VTB Capital is not acting as a fiduciary. VTB Capital does not provide, and has not provided, any investment advice or personal recommendation to you in relation to any transaction and/or any related securities described herein and is not responsible for providing or arranging for the provision of any general financial, strategic or specialist advice, including legal, regulatory, accounting, model auditing or taxation advice or services or any other services in relation to the transaction and/or any related securities described herein. Accordingly, VTB Capital is under no obligation to, and shall not, determine the suitability for you of any transaction described herein. You must determine, on your own behalf or through independent professional advice, the merits, terms, conditions and risks of any transaction described herein. Any reference to past performance of securities or other financial instruments is for informational purposes only and does not imply or indicate future results.


VTB Group entities do and seek to do business with companies referenced in research reports. Thus, investors should be aware that the VTB Group may have a conflict of interest that could affect the objectivity of this research report. Disclosures on the companies referenced in this report can be obtained by accessing the following webpages:

Research disclosures webpage -

Investment Recommendations disclosures webpage


Whilst every care has been taken in preparing the reports, no research analyst, director, officer, employee, agent or adviser of any member of the VTB Group gives or makes any representation, warranty or undertaking, whether express or implied, and accepts no responsibility or liability as to the reliability, accuracy or completeness of the information set out in the reports. Any responsibility or liability for any information contained in the reports is expressly disclaimed. All information contained in the reports is subject to change at any time without notice. No member of the VTB Group has an obligation to update, modify or amend the reports or to otherwise notify a reader thereof in the event that any matter stated in the reports, or any opinion, projection, forecast or estimate set forth in the reports, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn.

In the United Kingdom, the reports are approved and/or communicated by VTB Capital plc, a bank authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The reports are intended for those persons that would be classified as eligible counterparties or professional clients under the Financial Conduct Authority’s Conduct of Business rules. The reports have been made publicly available, and as such, constitute an ‘acceptable minor non-monetary benefit’ pursuant to Article 12(2) Commission Delegated Directive (EU) 2017/593 (as implemented into United Kingdom domestic law and regulation following the United Kingdom’s departure from the European Union). The reports do not intend to communicate an invitation or inducement to engage in investment activity, and as such do not fall within the definition of a Financial Promotion as per s.21 of the Financial Services and Markets Act 2000 (FSMA), and related rules and regulations (each as amended).

Reports are distributed in the European Economic Area (EEA) by VTB Bank (Europe) SE, registered with the number HRB 12169 at the register of companies in Frankfurt am Main and authorised by the Bundesanstalt fur Finanzdienstleistungsaufsicht (Federal Financial Supervisory Authority), Graurheindorfer Strasse 108, 53117 Bonn, Marie-Curie-Strasse 24-28, 60439 Frankfurt am Main and the European Central Bank, Sonnemannstrasse 20, 60314 Frankfurt am Main to provide banking transactions and financial services. Reports are intended for those persons classified as Eligible Counterparties or Professional Clients pursuant to Directive 2014/65/EU. In the United States, these reports are intended for persons who are considered ‘institutional investors’ as defined by FINRA Rule 2210(a)(4).

In Singapore, the reports are distributed by VTB Capital plc to accredited investors, expert investors or institutional investors only (as defined in the applicable Singapore laws and regulations and are not intended to be distributed directly or indirectly to any other class of person). Recipients of these reports in Singapore are to contact VTB Capital plc, Singapore branch in respect of any matters arising from, or in connection with, this report. VTB Capital plc, Singapore branch is regulated by the Monetary Authority of Singapore.

In Hong Kong, the reports are distributed by VTB Capital Hong Kong Limited, a licensed corporation (CE Ref: AXF967) licensed by the Hong Kong Securities and Futures Commission to “professional investors” (as defined in the Hong Kong Securities and Futures Ordinance and its subsidiary legislation) only.

In Russia, the reports are approved and/or communicated by JSC VTB Capital, a professional securities market participant regulated by the Central Bank of Russia. VTB Capital is not providing either investment advice or individual investment recommendations to the recipients of the reports or any other persons either under Federal Law On Securities Market of 22.04.1996 No. 39-FZ (or related rules and regulations, each as amended) or otherwise. These reports are not advertising as defined in Russian legislation, but are information and analysis not having product promotion as their main purpose and do not provide appraisal within the meaning of the Russian legislation on appraisal activity. Research reports do not constitute a personalised investment recommendation as defined in Russian laws and regulations, are not addressed to a specific client, and are prepared without analysing the financial circumstances, investment profiles or risk profiles of clients.


The reports are being furnished to certain persons as permitted by applicable law, and accordingly may not be reproduced or circulated to any other person without the prior written consent of a member of the VTB Group. Unauthorised use or disclosure of the reports is strictly prohibited.

By clicking ‘Confirm’ you attest that you are either a professional investor or eligible counterparty and agree to our terms of access as described above. If you are not considered to be a professional investor or eligible counterparty, please click ‘Decline’ and you will be reverted back to the VTB Capital website.