City trio sets nations on road to recovery with bond issue advice

Allen & Overy (A&O) has advised on European bond offerings in Romania, Latvia and Iceland, representing the start of a financial recovery for the three countries.


Philip Smith
Philip Smith

Teams from A&O advised the governments of all three countries on the sale of the bonds, while Clifford Chance represented the arranging banks in ­Romania and Latvia and Sullivan & Cromwell advised banks in Iceland.

A&O partner Phil Smith, who led the team advising the Romanian Ministry of Public Finance on its oversubscribed issue of $1.5bn (£940m) of five-year bonds on 17 June, said the bond offers were hugely significant for the European ­market.

“One of the drivers for it is investor appetite for yield in very low-interest-rate ­environments,” he said. “Romania’s a good benchmark deal and it’s evidence of that part of the world coming through the crisis and making good use of the international and IMF loans. You could argue that the bailouts have worked.”

The Romanian Ministry of Public Finance is a new client for A&O, won on the back of a public tender process, and Smith is ­confident that the bond offer will lead to more work from the sovereign state.

“We set up a medium-term note programme, which means you’re then equipped to do a bond issue very quickly. Having a ­programme raises the expectation of doing two or three deals a year, subject to the market,” he said.

A team from Clifford Chance’s London and Bucharest offices, led by partner David Dunnigan, advised arranging banks Société Générale and Erste Group Bank.

In Latvia, where A&O has a longstanding relationship with the government, ­partner Roger Wedderburn-Day led a team advising on the issue of $500m of
10-year bonds, with US advice provided by partner Max Aaron.

Clifford Chance partners Dunnigan and Robert ­Trefny advised the arranging banks.

A&O partner Matthew Hartley advised on the ­Iceland government’s issue of $1bn of five-year bonds, with partner Adam Kupitz advising on the US aspects of the deal. A Sullivan team advised the arranging banks.

Smith said the landmark bond offers could provide a future model for other struggling European ­countries, including Greece, Ireland and Portugal.

”A combination of ­austerity measures and financial support has turned around these three countries, and I don’t see why it couldn’t apply ­equally elsewhere,” he said.