This week’s main event is, without a doubt, the intention of Latvenergo to issue public bonds. This means of attracting additional funding is popular in the world, but is rare in Latvia.
Latvenergo is off to the exchange
The company has yet to announce the nominal price of a single bond, the same goes for profitability and repayment period. The only thing that is known for certain, the overall revenue from securities is expected to be 50 million LVL, their issue should take place before the end of 2012. This untraditional step for this company is explained by the wish to diversify its loan portfolio.
The news of this initiative was taken with enthusiasm at NASDAQ OMX Riga exchange. Chairwoman of this financial institution, Daiga Auzina-Melelksne notes: «Quotation of Latvenergo bonds on the exchange will give local pension funds and private investors the opportunity to invest in national economy.» Aside from that, she mentions another benefit from this initiative: the company will become transparent; the issuer is obligated to present financial reports twice per year, instead of once. Furthermore, such companies are also obligated to reports about important events – such as large contracts.
Latvian market has seen public bond issues in the past (ELKO Group attracted 6.5 million EUR using this method), but Latvenergo’s issue will clearly be one of the largest.
Investment banker Mikus Janvars, partner of Porta Finance, believes: if Latvenergo offers investors its bonds with attractive profitability, demand will be high. According to the specialist, there is a tendency noted in the Western world: companies refuse credits, preferring to attract funds using bonds more and more often. In time, this tendency is expected to become clearer: because of the high requirements signed in Basel III towards capitals of credit-financial institutions, their loans will become more expensive. According to Janvars, a successful bond issue would become a good example for local companies. Some of them will undoubtedly follow this road.
Optimism as the engine for GDP. Or is it the other way around?
Swedbank also reported some good news this week: its experts report that they have successfully increased their projections for the country’s GDP growth. This means that Latvia’s economy is successfully developing despite careful predictions. Previously (in April), specialists believed that Latvia will conclude the year with a GDP rise of 2.5%. Now the specialists expect an expansion of 4%. Projection for 2013 remains the same (3.5%), for 2014 – 5.2%.
But what makes Latvia stand out from its neighbours and confuses any possible predictions? Martins Kazaks, Latvia Swedbank’s head economist, allows for the answer to lie within the stable and positive attitude of our economy. Businessmen use this tendency to grow investments and create new jobs. Furthermore, low inflation contributes to the growing purchasing power of Latvian consumers.
Not only do we stand ahead of «old» EU members in terms of a positive perspective, but Estonia and Lithuania as well. According to Swedbank analyst, he tried to explain the nature of this peculiar Latvian optimism, but he failed to find a good enough explanation. The result is clear nonetheless: Latvia’s GDP is showing the highest growth rates in the EU.
The Swedish to award Latvians for their achievements
Meanwhile, our national businessmen can submit applications for participation in the contest for the prestigious Swedish Business Award 2012, which is organized in Latvia for the fourth time by the Swedish Export Council, the Swedish embassy in Latvia and Swedbank.
Any Latvian company can submit applications for participation. Contestants will be offered to compete for awards in nominations like: «Stably growing and long-term business», «Project or initiative in the sphere of corporate social responsibility», «Young Businessman of the year», as well as the new category – «Achievements in the sphere of environment».
«Along with traditional awards, given to socially responsible, long-term planning and perspective young businesses, with support from the Swedish RagnSells company, we decided to expand the number of awards for companies that take care of the environment. This issue affects society and every one of us. This is why we want to choose the businessmen that are working to benefit nature, companies that do what they can to improve our environment’s ecology,»- says the manager of the Swedish Export Council in Latvia Ansis Murnieks.
Applications will be allowed to submit before September 13 using www.swedishbusinessawards.com. Awards ceremony will take place on October 16, 2012. Every award is a good opportunity for any company to evaluate their success.
Snoras Bank is declared bankrupt
One more important event took place in Lithuania. However, this event also affects Latvia. The Vilnius Regional Court has declared the Lithuanian Snoras Bank bankrupt and approved of its liquidation. If this decision is not challenged within the next seven days, the last, theoretical chance to resurrect Snoras Bank will be lost. According to Chairman of the Investors Association Vitautas Plunksnis, the court’s verdict will, most likely, not be challenged. According to Aurelia Mazintiene, Chairwoman of the Creditors Committee and the temporary manager of the Deposit Insurance Fund, property sale will come after the decision to liquidate Snoras Bank. Snoras Bank creditors demand 6.5 billion LTL; the clear value of the bank’s property was 4.4 billion LTL on November 16, 2011.
Latvia, on the other hand, is still witnessing the sale of Snoras’ “daughter” – Latvijas Krajbanka. 13 real estate objects located in Riga and Jurmala, including 17 vehicles, are planned to be sold this week. It is planned to find a buyer of the bank’s credit portfolio before spring 2013. This portfolio is estimated to be worth 202.5 million LVL