European Bank for Reconstruction and Development Partner of Choice. March 2016

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1 European Bank for Reconstruction and Development Partner of Choice March 2016

2 Outline Introduction to the EBRD EBRD Co-financing Statistics A/B Loans and Preferred Creditor Status Selected Recent Co-financings & Market Highlights Top Commercial Participants Loan Syndications Team Syndicated Loan Administration (SLA) Team 2

3 Where we invest 3

4 Overview of EBRD Annual Business Investment ( ABI ) EUR billion Cumulative EBRD Investment Established in national & 2 supranational shareholders HQ in London, 42 local offices Promotes market-based economies in 36 countries in Central & Eastern Europe, CIS, Mongolia, Turkey, Southern & Eastern Mediterranean region EUR billion cumulatively committed for 4,473 projects of which 79% is private investments as of Dec 2015 EUR 80.8 billion cumulatively disbursed AAA/Aaa/AAA rating with stable outlook 4

5 EBRD a Catalyst for Change Cumulative additional funds EUR 186 billion EBRD Additional Funds EBRD investments have attracted an additional EUR 186 billion from domestic and foreign investors Loan syndications is a crucial element in mobilisation Every EUR invested by EBRD mobilises approximately twice as much in total project costs

6 EBRD 2015 country breakdown ABI: EUR 9.4 billion, 381 projects Turkey 20% Central Asia 15% Central Europe 13% SEMED 16% Cyprus 0% SE Europe 14% Russia 1% Greece 3% E. Eur. Cauc. 18% 6

7 EBRD 2015 sector breakdown ABI: EUR 9.4 billion, 381 projects Infrastructure 19% Energy 27% Industry, Commerce & Agribusiness 26% Financial Institutions 32% 7

8 EBRD 2015 classification breakdown ABI: EUR 9.4 billion, 381projects State 25% Equity 17% Gtee 5% Private 75% Debt 79% 8

9 2015 Annual Mobilised Investment ( AMI ) by country AMI: EUR 2.3 billion Other 11% Turkey 12% Poland 4% Romania 4% Kazakhstan 10% Mongolia 42% Ukraine 2% Azerbaijan 8% Jordan 2% Egypt 5% 9

10 2015 AMI by team AMI: EUR 2.3 billion Transport 6% FI 1% Prop & Tourism 3% Power & Energy 10% MEI 7% Agribusiness 4% M&S 5% Natural Resources 64% 10

11 2015 AMI by type AMI: EUR 2.3 billion Special funds 3% Parallel loans 26% B loans 71% 11

12 Outline Introduction to the EBRD EBRD Co-financing Statistics A/B Loans and Preferred Creditor Status Selected Recent Co-financings & Market Highlights Top Commercial Participants Loan Syndications Team Syndicated Loan Administration (SLA) Team 12

13 EBRD Co-financing main statistics 10, ,500 Volumes (EUR mm) 5,000 2, Number of projects 0 0 Volumes (EUR million) No. projects Includes B loans, parallel loans, IFI loans, ECA loans, special & cooperation funds, grants, guarantees, unfunded risk participations and equity. 13

14 EBRD mobilised loan volumes 2, , EUR million 1,500 1, EBRD Co-financing by Country in No. of B loans B loans volume other mobilised Number of B loans 11 February

15 Rationale for Co-financing with EBRD Strong EBRD B Loan portfolio performance Total B Loans committed = EUR 17.7 billion Gross write-offs/total B Loans committed = 0.17% Net write-offs/total B Loans after recoveries/write backs = 0.17% Key assumptions/provisos: 1. Commercial banks write off the same percentage of its B Loan as the EBRD writes off on its A Loan 2. Currencies vary, and thus precise percentage may vary 3. Information and data as per end of December 2015 (subject to confirmation by auditors) 15

16 Outline Introduction to the EBRD EBRD Co-financing Statistics A/B Loans and Preferred Creditor Status Selected Recent Co-financings & Market Highlights Top Commercial Participants Loan Syndications Team Syndicated Loan Administration (SLA) Team 16

17 Preferred Creditor Status: What It Means Loans not subject to moratoria, rescheduling or restrictions on convertibility or transferability of hard currency Exemption from country provisioning requirements (where applicable) for participant banks EBRD Loans not in Paris Club or London Club May allow rated transactions to pierce the sovereign ceiling 17

18 Preferred Creditor Status (PCS): What It Does Not Mean A guarantee or letter of comfort from the government, or from the EBRD, that the loan will perform commercially if a loan does not perform for commercial reasons, PCS does not protect the loan An indicator of the loan s creditworthiness per se co-financiers must carry out their own due diligence in the normal manner 18

19 Preferred Creditor Status has been Tested Following the Russian moratorium of 17 August 1998, the Russian Central Bank issued this exemption: [the moratorium]... does not cover... obligations of Russian residents under financial loans from the EBRD, including those involving resources from foreign banks and financial and investment institutions During the moratorium, all payments to the EBRD and its B lenders came through on time. 19

20 A/B Loans EBRD as Lender of Record EBRD is lender of record and contracts with the borrower to provide the funds Commercial banks are participants in the EBRD loan EBRD is a preferred creditor and banks benefit from this status EBRD portion: A Loan Banks portion: B Loan 20

21 A/B Loans EBRD as Lender of Record Borrower EBRD A Loan Banks B Loan EBRD is lender of record for entire loan, BUT commits only to the A Loan Participation agreement transfers all risks to B lender (B Loan) B lenders share Preferred Creditor Status 21

22 EBRD as a Parallel Lender Borrower EBRD Loan Parallel Loan Each lender/group of lenders enters into direct contractual relationships with the Borrower Parallel lenders do not share Preferred Creditor Status Suitable for domestic banks and ECAs 22

23 Outline Introduction to the EBRD EBRD Co-financing Statistics A/B Loans and Preferred Creditor Status Selected Recent Co-financings & Market Highlights Top Commercial Participants Loan Syndications Team Syndicated Loan Administration (SLA) Team 23

24 EBRD Syndications Highlights Natural Resources EBRD signed a USD 1.22 billion A/B loan with Oyu Tolgoi LLC in connection with the USD 4.4 billion Oyu Tolgoi copper and gold project in Mongolia, sponsored by Rio Tinto. EBRD was part of a syndicate of IFIs and ECAs, along with 15 commercial banks participating in the EBRD/IFC B loans providing the USD 4.4. billion financing for this project EBRD supported the second stage of the exploration and development of the Shah Deniz gas field in Azerbaijan by financing Lukoil s share in the project with a USD 450 million A/B loan complemented by an identical USD 450 million A/B loan provided by ADB and a USD 60 million parallel loan from BSTDB In Egypt, it was the first time that EBRD arranged two syndicated loan facilities with parallel lenders. For Advanced Energy Systems Company SAE. EBRD assumed the role of Mandated Lead Arranger to arrange a USD 145 million conventional syndicated loan with six parallel lenders from the region and a USD 25 million Islamic finance tranche provided by a subsidiary of the Islamic Development Bank. EBRD also provided a USD 40 million loan as part of a USD reserve base facility to private oil company Merlon and sold a small portion under the B loan umbrella, a first on the SEMED region 24

25 EBRD Syndications Highlights contd/. MEI EBRD co-financed a EUR 1.1 billion investment for the largest integrated health campus financed to date under the Turkish government hospital PPP programme, in the city of Etlik. EBRD s EUR 381 million A/B loan was part of EUR 878 million provided by IFC, BSTDB, DEG, SACE and international and local Turkish commercial banks, who all stretched the tenor to 18 years, a new benchmark for a hospital PPP project Agribusiness Three agribusiness transactions were syndicated in 2015, including two in Ukraine, a EUR 40 million A/B loan to a trading company of ViOil Group, one of the top five sunflower oil producers and of the largest sunflower oil exporters in Ukraine, and a USD 130 million A/B loan to Nibulon Group, a leading integrated grain/oilseed exporter and producer, tenors usually 1 year with extension option Power & Energy In Romania the Power & Energy team signed the first A/B loan in RON with CEZ Distributie S.A./Romania, a 100% subsidiary of CEZ Group/Czech Republic, for a total amount of RON 675 million of which EUR 87 million equivalent were syndicated as a B loan to three commercial banks who booked their RON participations outside Romania Property & Tourism In Jordan, EBRD led the USD 100 million financing of the first phase of the Ayla Oasis Regeneration Project in Aqaba, taking USD 60 million on its own account with two local lenders taking the residual amount 25

26 Selected Syndicated Loans in 2015 Lukoil Overseas Shah Deniz Ltd. Natural Resources Azerbaijan USD 470M Reka Bitkisel Yaglar San Ve Tic A.S. Agribusiness ` Turkey EUR 45M Agribusiness Ukraine USD 40M Ankara Etlik Integrated Health Campus PPP MEI Turkey EUR 256M Voshkod Chromium Mine Natural Resources Kazkahstan USD 260M n Manufacturing &Services Turkey EUR 200M Agribusiness Ukraine USD 85M Transport Kazakhstan USD 100M Zagreb Holding Water and Sewer Investment Project MEI Croatia EUR 26.2M Darlowo Wind Farm Power & Energy Poland PLN 273M Property & Tourism Regional EUR 50.8M Gold & Copper Mine Natural Resources Mongolia USD 1.22BN Oil Service Company Natural Resources Egypt USD 170M Oil Company Natural Resources Egypt USD 40M CEZ Distributie S.A. Power & Energy Romania RON M Ayla Oasis Regeneration Project Aqaba Property & Tourism USD 100M Property & Tourism Macedonia EUR 44M Transport Kazakhstan USD 300M

27 Selected Syndicated Loans in 2014 Power& Energy Georgia Manufacturing & Services Russia Property & Tourism Albania COMPLEXUL ENERGETIC OLTENIA Power & Energy Romania Natural Resources Georgia Property & Tourism Croatia 2014: USD 80 mln 2014: EUR 123 mln 2014: EUR mln 2014: EUR 192 mln 2014: USD 65 mln 2014: EUR 10 mln ` Risk Participation Automotive Turkey Financial Institutions Azerbaijan Financial Institutions Belarus Food Manufacturing Croatia Power & Energy Russia Agribusiness Turkey 2014: EUR 140 mln 2014: USD 42 mln 2014: EUR 30 mln 2014: EUR 73 mln 2014: USD 50 mln 2014: USD 47 mln Kom Munai LLP Natural Resources Kazakhstan Agribusiness Ukraine Power & Energy Poland Agribusiness Romania Agribusiness Ukraine Transport Turkey 2014: USD 200 mln 2014: USD 40 mln 2014: PLN 630 mln 2014: EUR 60 mln 2014: EUR 8mln 2014: EUR 63mln 27

28 Selected Syndicated Loans in 2013 Automotive Agribusiness Automotive Property Natural Resources Power Russia, Turkey, Hungary, Poland 2013: EUR 150 mln Romania 2013: EUR 80 mln Turkey 2013: EUR 75 mln Multi Development shopping center Lviv Ukraine 2013: EUR 46 mln Mongolia 2013: USD 350 mln Poland 2013: PLN 800 mln ` Telecom Wood Processing Food Retail Automotive Power Agribusiness Romania Russia Russia Russia Kazakhstan Turkey 2013: EUR 225 mln 2013: EUR 90 mln 2013: RUB 4.1 bln 2013: EUR mln 2013: USD 57 mln 2013: EUR 50 mln MEI Agribusiness Natural Resources Financial Institutions Power Automotive Fund for Local Authorities and Governments Bulgaria 2013: EUR 35 mln Croatia 2013: EUR 20 mln Ukraine 2013: USD 60 mln Kyrgyzstan 2013: USD 12 mln Russia 2013: RUB 12 bln Regional 2013: EUR 100 mln 28

29 EBRD region syndicated loan volumes, (market data) Turkey represents 45% of total syndicated loan volume USD bn Egypt Greece Other Poland Turkey Russia 11 February

30 Some of the challenges A tough operating environment Ongoing bank capital constraints (especially Eurozone) Basel III Geopolitical tensions Slowdown in GDP growth, or recession Constrained credit growth: cross-border deleveraging and high NPLs Low private capital inflow, uneven FDI Pressure on local currencies Constrained public finances to support infrastructure investment 30

31 Outlook Many EMs are suffering the effects of the slump in oil and other commodity prices. Oil producers are badly affected by the fall in oil prices, leaving government budgets underfunded. Many large corporations and countries that have borrowed in USD may be badly affected by any future USD interest rate rises. Fears surrounding the impact of negative interest rates and the consequences for European banks. Higher volumes in the Americas and Western Europe may offset the EM challenges. The continued low interest rate environment is prompting borrowers to refinance existing loans. There is relatively strong acquisition finance activity, as well as a pipeline of infrastructure PPPs in developed as well as some emerging markets. The continuing sanctions against certain Russian borrowers will continue to impact adversely the region s loan markets. In addition, tensions and business boycotts between Russia and Turkey might have an impact on investment decisions in Turkey in The neighbouring region with strong trade links to Russia will likely also suffer and banks will likely continue to scale back their lending as those countries experience currency devaluation and falling commodity prices which constitute a high percentage of their exports. 31

32 Outline Introduction to the EBRD EBRD Co-financing Statistics A/B Loans and Preferred Creditor Status Selected Recent Co-financings & Market Highlights Top Commercial Participants Loan Syndications Team Syndicated Loan Administration (SLA) Team 32

33 Top commercial participants. Cumulative to year-end 2015 Annual New Commitments Total Active Commitments 1. ING Group 2. UniCredit Group 3. Societe Generale 4. BNP Paribas 5. HSBC 6. Credit Agricole 7. Australia and NZ Banking Group 8. SMBC 9. Mitsubishi UFJ 10.Deutsche Bank 1. UniCredit Group 2. ING Group 3. Societe Generale EBRD Co-financing by Country in Raiffeisen Bank International 5. Erste Group 6. BNP Paribas 7. FMO 8. Credit Agricole 9. Intesa Sanpaolo 10.HSBC 33

34 Outline Introduction to the EBRD EBRD Co-financing Statistics A/B Loans and Preferred Creditor Status Selected Recent Co-financings & Market Highlights Top Commercial Participants Loan Syndications Team Syndicated Loan Administration (SLA) Team 34

35 Loan Syndications Team Lorenz Jorgensen Director, Head of Loan Syndications / Tel: Michael Delia Deputy Head of Loan Syndications / Tel: Daniel Borrego Senior Banker / Tel: Christian Kleboth Senior Banker / Tel: Joerg Zinnecker Senior Banker / Tel: Ruth Porter Executive Assistant / Tel: Team fax:

36 Outline Introduction to the EBRD EBRD Co-financing Statistics A/B Loans and Preferred Creditor Status Selected Recent Co-financings & Market Highlights Top Commercial Participants Loan Syndications Team Syndicated Loan Administration (SLA) Team 36

37 Syndicated Loan Administration (SLA) Team Point of contact after signing of the Participation Agreement for: Disbursements Waivers, amendments, consents & novations / transfers Covenant reporting Ad hoc enquiries: Tel: or 6413 / Fax: [email protected] *Part of the Operation Admin Unit (OAU) 37

38 Notice and Disclaimer EBRD makes no representation, express or implied, as to the accuracy or completeness of the information contained in this presentation and liability therefor is expressly disclaimed All data relating to the loan markets are sourced from a combination of Dealogic LoanAnalytics, LoanRadar and other public sources 38