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Final verdict on CEE lending

In our final thought-leadership piece ahead of the event, EMSA Capital's Jonathan Nighswander delivers the final verdict on the state of CEE's liquidity, growth areas, and borrower needs. Amid global econonic insecurity, CEE is burdened by NPLs, regional fragmentation, and lack of infrastructure investment. What are the growth prospects for CEE's loan market?

Despite a climate of global uncertainty, this year has nevertheless seen an increase in the liquidity available to borrowers across much of CEE.  Our portfolio companies are finding access to inexpensive working capital facilities and factoring is more readily available than 2-3 years ago.

While non-performing and underperforming loans are still acting as a deadweight depressing economic activity - tying up assets and human resources - there is both a greater will to face the problem directly on the part of the lenders, and an increasing pool of international capital eager to come into the region.

We still see regional fragmentation as a brake on growth in lending and investment in CEE. Despite CEE being notionally a region of over 120 million people with a combined GDP over 1,4 trillion (larger than Russia and almost as large as Brazil), it is still difficult to scale deals to a size that can attract significant leverage or large syndicated facilities.  Larger investors and lenders perceive the cost of managing multiple jurisdictions, legal systems, and even language and business cultures to be high relative to the amount of capital that they can deploy.

Nonetheless, the opportunities for investment are myriad, as the region still has significant deficits in the basic infrastructure needed to support economic growth and a more demanding population, including transportation, energy and healthcare.  Those capital needs, combined with increasingly innovative and entrepreneurial local business leaders, will make the CEE one of the more interesting markets for lenders and investors over the next few years.
This content is provided by Euromoney Seminars for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.