The rules for joining the euro

1) Countries must have a budget deficit of less than 3% GDP; 2) Countries must have government debt of less than 60% their GDP, or be on a declining trend; 3) Countries must have inflation within 1.5% the average figure for the three countries with the lowest inflation in the EU; 4) Domestic bond spreads must not be more than 2% over German bunds; 5) Countries must be a member of the ERM2 system, without causing severe tensions, for at least two years prior to Euro membership.

Joining the euro club

Having joined the European club, many of the countries in Central and Eastern Europe are now knocking on the door of the rather more exclusive club of euro entry. It has never been easy to satisfy the criteria, but the next round of entrants worry the goalposts have been moved. Solomon Teague found out more.

Widening spreads scares off all but essential business

Zeina Bignier, head of DCM origination for sovereign, supra and agencies at SG, has observed a significant widening in the spreads on the secondary CDS market in early 2008 throughout Eastern Europe. Things reached a peak on 17 March, she noted, and although things have come back slightly since then, funding costs remain very high. In Poland spreads on 10 year paper were 15bps before the credit crisis. On 17 March they were 115bps. Poland is neither unique nor unrepresentative: Lithuanian 10 year has gone from 50bps in early 2007 to 215bps....

Occasional visits

Central European Eurobond issuance remains largely confined to sovereigns within the EU as well developed local markets continue to provide most of the region's banking and corporate financing needs. Michael Winfield and John Weavers report.

Building for tomorrow

The European Bank for Reconstruction and Development cut its teeth helping drag Russia through the mess of 1998 to its current modern incarnation. Now it is working with other European and central Asian countries, reports Solomon Teague.

Grand, Central and Stationary

Unlike the Russian investment-grade loan market which is powering forward under full steam, loan markets in central and Eastern Europe are quiet, lacking the kind of scale necessary to drive the market in the current conditions, and the fillip brought by commodities. Ouida Taaffe reports.

Limited accession boost for ECM

Issuance from the EU accession countries has been relatively low compared to the explosion of activity from Russia and the CIS. A lower risk profile and lower growth forecasts than other emerging markets have played a part, but the pipeline of privatisations remains strong, reports Ian Forrest.

New players drive M&A bonanza

Despite over a decade of strong M&A activity in the Central East European region, there’s still more to come. New players are moving in and new frontiers are opening up, as Justin Pugsley reports.

Retail driven

Bank resources are directed to cash-rich Russia and the Middle East rather than the CEE countries that provide little derivative opportunities. But while the institutional market remains slight, retail interest is driving demand for structured products, at a time when they are a hard sell across Europe.

Watching and waiting

Central and Eastern Europe has the potential to become a significant player in the securitisation field, but issuance figures suggest the region has thus far failed to live up to expectations. Anna Carlisle investigates the factors hindering the progress.

Too late now?

Investors love an emerging market. Central and Eastern Europe has been popular with investors for years but while its markets are emerging in terms of size, many argue that post-accession they don’t offer the same value as those further east. Solomon Teague reports.

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