October 8, 2014
Transcription
October 8, 2014
October 8, 2014 This is bne's Southeast Europe daily newsletter, a list of the top stories from the region. You can receive the list as a plain text or html email or as a pdf file. Manage your delivery options here:http://businessneweurope.eu/users/subs.php SE TOP STORIES 1. 14 killed as Kurds protest across Turkey 2. Bulgaria centre right GERB party to try and for minority government 3. Gazprom may take stake in Serbia’s Petrohemija 4. Hungary's MOL inching towards majority in Croatia's INA 5. Serbia Seeks Limited Free-Trade Regime With Russia STORIES FROM WEBSITE 6. BRICKS & MORTAR: Interest piqued in CEE's riskier property markets 7. Ukraine's egg king finds his bank, other businesses in financial hot water SE RESEARCH & COMMENT 8. Romania: Nuclearelectrica (SNN RO): (E)GSM resolutions – neutral (company release) 9. Romania: SIFs, Bucharest Stock Exchange (SIF1 RO, SIF2 RO, SIF3 RO, SIF4 RO, SIF5 RO, BVB RO): Proposed reforms are now included in a draft law instead of an ordinance – neutral (mfinante.ro) 10. Romgaz cut to HOLD, TP RON 39.5 - Good yields but subdued growth 11. Rosatom risks 12. Turkey, the Kurds and Iraq: The Prize and Peril of Kirkuk SE OTHER NEWS 13. Bulgaria's GERB to Start Talks on New Gov't Monday 14. Grey economy in Croatia much above European average 15. LUKoil Seeks European Cash for Project Undercutting Gazprom's South Stream 16. Moldovan authorities fine 4 TV channels for re-broadcasting Russian programs 17. Montenegro Puts Leading Defense Company Up for Sale 18. Romanian senator, former minister get jail sentences in Rompetrol refinery stock manipulation 19. Russia's LUKOIL begins oil refinery startup in Romania 20. Serbia’s 23% Pile of Bad Loans Lures Distressed Debt Funds SE TOP STORIES 1. 14 killed as Kurds protest across Turkey bne October 8, 2014 Up to 14 people were killed in violent protests across Turkey on October 7. Kurdish groups demanding intervention against the Islamic State militants in Syria clashed with both police and members of the radical Islamic group Hizbullah. Protests broke out in towns across the majority Kurdish east and southeast regions of Turkey on October 7, as Turkey’s Kurdish population expressed its anger and frustration over the lack of action to prevent the fall of Kobane, a mainly Kurdish town on Syria’s border with Turkey. Eight people were killed in the southeastern town of Diyarbakir, where according to Hurriyet Daily News members of the radical Islamist group Hizbullah opened fire on pro-intervention protesters. Five of those killed in clashes between protesters sympathetic to the outlawed Kurdistan Workers' Party (PKK) and Islamist radicals were linked to Hizbullah. Elsewhere in Turkey more deaths were reported as Kurdish protesters clashed with police. Almost 100 people were detained in Istanbul, and arrests were also made in Ankara. A curfew has now been imposed across six Turkish regions. Turkish security forces also prevented hundreds of Kurds from crossing the border to fight against Islamic State (IS) militants in Kobane. Turkish forces are reported to be lined up along the country’s border with Syria, but so far have not advanced. Turkey’s relationship with its large Kurdish population is the main reason for Ankara’s reluctance to become involved in the conflict. The Turkish government wants to see Bashir Al-Assad toppled in Syria, but does not want to see either the Syrian Kurds or the outlawed Kurdistan Workers' Party (PKK) in Turkey strengthened as a result. Turkish President Recep Tayyip Erdogan said on October 7 that Kobane was about to fall, and called for cooperation “for a ground operation.” “We had warned the West. We wanted three things: no-fly zone, a secure zone parallel to that, and the training of moderate Syrian rebels,” Erdogan said during a visit to a Kurdish refugee camp, the BBC reported. On October 2, the Turkish parliament approved a motion to allow a military force in Iraq and Syria against the IS. Some three-quarters of MPs voted in favour, signalling a major change in Turkey’s stance on intervention. The vote would allow Turkish forces to be deployed in both countries, alongside around 40 other members of a Nato-led coalition, as well as allowing foreign troops access to Turkish territory. While Turkey has borne the brunt of Kurdish anger over the lack of action in Syria, there have also been demonstrations in several other European countries. Hundreds demonstrated in several German cities, and a small group of protesters broke into the European parliament on October 7. 2. Bulgaria centre right GERB party to try and for minority government Elana Trading October 8, 2014 GERB, the larger centre-right party in Bulgaria, won the general election, but still does not have the majority to form a government. The new National Assembly will be heavily fragmented, say analysts, as a parties are entering in the new session. Forming a new government looks extremely difficult, however, GERB will try and form a minority government. If this fails in the worst case scenario it will be necessary to call fresh elections as soon as this December. 3. Gazprom may take stake in Serbia’s Petrohemija bne October 8, 2014 Russian gas giant Gazprom may take a stake in Serbian petrochemicals company HIP-Petrohemija in return for writing off Serbia’s outstanding natural gas debts. Serbian Foreign Minister Ivica Dacic said during a visit to Moscow on October 7 that the debts may be exchanged for a stake in Petrohemija. He did not specify how large the stake would be. "We talked today and agreed to repay the debt with the property, specifically the Petrohemija company,” Dacic told journalists in Moscow according to reports in the Serbian press. Serbia has outstanding debts of around $180m for natural gas supplies from Russia. This includes $148m for supplies during February-March 2013 and March-April 2014, as well as $34.8m for gas supplied back in 1995-2001, according to a source quoted by ITAR-TASS Gazprom has proposed extending the terms for its repayment scheme for the 19952001 supplies until the end of this year, which would mean payments of $3 per 1,000 cubic metres added to the payments Serbia is due to make for gas supplies this year. HIP-Petrohemija is Serbia’s largest petrochemicals company, with total capacity of more than 600,000 tonnes a year. The Pancevo-based company generates around 80% of its revenues from exports, mainly to European Union countries. However, the company was forced to suspend production during the global financial crisis, later restarting operations after receiving financial support from Belgrade and agreeing to reschedule its debts with oil and gas company Naftna Industrija Srbije (NIS), which is 56.15 % owned by Gazprom. In 2011, it signed a strategic cooperation deal with NIS. During his visit to Moscow, Dacic also asked Russia to look at alternative ways to supply gas to Serbia, as supplies to both Serbia and other East European countries via Ukraine have dropped recently. Serbia is planning to go ahead with construction of its section of the South Stream gas pipeline that will carry gas from Russia to Europe, bypassing Ukraine. The director of Serbian state gas company Srbijagas, Dusan Bajatovic, said on September 26 that he expects work to start in late October or early November, despite opposition from the European Union to the project. 4. Hungary's MOL inching towards majority in Croatia's INA bne October 8, 2014 MOL is closing in on the acquisition of a 0.8% stake in Croatian oil and gas company INA, according to local press, which would bring the Hungarian group within a whisker of a majority in the company, over which it is fighting a bitter battle with Zagreb. MOL is close to clinching a deal to buy 80,000 INA shares from Raiffeisen Bank International's (RBI) pension fund in Croatia for at least HRK320m (€42m), according to Croatian daily Poslovni Dnevnik, which named no source for the story. The pension fund's parent, RBI, was hired by MOL as advisor regarding its holdings in INA, the newspaper points out. Should the purchase go through, MOL would be within a hair’s breadth of taking control of INA. The Hungarian oil and gas company currently holds 49.08%. The Croatian state, which has been fighting to regain operational control of INA, retains 44.84%. MOL launched a failed attempt to gain control via an offer to holders of the free float in 2010, although it did manage to scoop up a stake of around 1.6%. News of the potential purchase from RBI pushed INA shares higher on the Zagreb bourse. Read more here: http://www.bne.eu/content/story/hungarys-mol-inching-towardsmajority-croatias-ina 5. Serbia Seeks Limited Free-Trade Regime With Russia The Moscow Times October 8, 2014 Serbia has asked Russia for a free-trade regime for certain classes of goods, news agency TASS reported Tuesday, citing Russian Energy Minister Alexander Novak. Serbia would like the proposed free-trade regime to cover sugar, cigarettes, alcohol, meat, poultry and cars, Serbian Foreign Minister Ivica Dacic said. The agreement would cover bilateral trade in these goods, and would therefore require changes to duties paid by both Russia and Serbia. Read more here: http://www.themoscowtimes.com/business/article/serbia-seekslimited-free-trade-regime-with-russia/508585.html STORIES FROM WEBSITE 6. BRICKS & MORTAR: Interest piqued in CEE's riskier property markets Tim Gosling in Prague October 7, 2014 Investors were underwhelmed in late September when Polish real estate investor GTC announced a rights issue to fund an acquisitions drive across Central and Eastern Europe. But analysts also think that now is the time to strike on real estate in riskier markets in the region, although the strategy remains simplistic. Saddled with a portfolio weighed down over the last five years or so by sluggish economic growth around the region, GTC has been struggling in recent years. The €70.1m loss it reported in the second quarter of the year was led by huge cuts in valuations, with assets in Croatia and Romania doing the most damage. However, with US fund manager Lone Star in control since November, GTC is now hunting for more capital to finance acquisitions in the same region. The company announced on September 15 a plan to issue 140m shares, expanding outstanding stock by 43%. Shareholders will vote on the plan at a meeting on October 13. GTC's share price, already having slumped on the poor recent results, instantly shed over 8% to a two-year low on the Warsaw Stock Exchange after the announcement. However, the shares recovered by the close on September 15 to reduce the loss to around 3%, with investors apparently split on whether the time is right to start buying CEE real estate again. Read more here: http://www.bne.eu/content/story/bricks-mortar-interest-piquedcees-riskier-property-markets 7. Ukraine's egg king finds his bank, other businesses in financial hot water Graham Stack in Berlin October 8, 2014 VAB Bank, 90% controlled by Ukraine's leading agriculture oligarch Oleh Bakhmatyuk, has said it is looking for a foreign investor to boost share capital, in a move that smacks of desperation after the bank announced October 2 it had defaulted on a $2m coupon payment. VAB CEO Denis Maltsev said in a statement posted on the bank's website that as a result of the events of 2014 in Crimea and the eastern Donbass region, “a significant number of clients are no longer able to meet their obligations towards the bank, in particular hard currency borrowers.” At the same time, he said, depositors have withdrawn over UAH200bn (€12bn) in cash since the start of the year. Maltsev said that the bank would recapitalise with the help of foreign investors and "the obligatory support of the National Bank of Ukraine (NBU)," which would "guarantee that the bank's meets its obligations under complete control of the NBU." VAB failed to make a coupon payment of only $2m that was due on September 14. On October 2, Maltsev blamed the default on the difficulties in finding the cash in Ukraine, given the NBU's tight controls on the currency market, but said the bank would find the cash with "a week or two," as quoted by newswires. In order to shore up the hryvnia exchange rate, the NBU has introduced tight controls on the currency market and restrictive policy regarding refinancing and stabilization loans, with numerous smaller banks going out of business in recent weeks. Read more here: http://www.bne.eu/content/story/ukraines-egg-king-finds-hisbank-other-businesses-financial-hot-water SE RESEARCH & COMMENT 8. Romania: Nuclearelectrica (SNN RO): (E)GSM resolutions – neutral (company release) Raiffeisen October 8, 2014 * Shareholders approved a share capital increase by a maximum of 23.9 mn shares, mainly to account for the subsidies from the state for the completion of Unit 2; minority shareholders will have to pay RON 10 per share to avoid dilution. * Shareholders have also approved the acquisition of advisory services in connection with a possible purchase by SNN of some assets owned by Enel in Romania. 9. Romania: SIFs, Bucharest Stock Exchange (SIF1 RO, SIF2 RO, SIF3 RO, SIF4 RO, SIF5 RO, BVB RO): Proposed reforms are now included in a draft law instead of an ordinance – neutral (mfinante.ro) Raiffeisen October 8, 2014 * The Government has modified today the legal form which includes the proposed reforms of the capital market from a draft ordinance to a draft law. In this case, the Parliament’s approval is mandatory for its coming into force and from our experience this procedure is usually lengthier. Catalin Diaconu 10. Romgaz cut to HOLD, TP RON 39.5 - Good yields but subdued growth Raiffeisen October 8, 2014 * We incorporated weaker domestic gas price assumptions, triggered by a lower price for industrial consumers and a delay of the liberalization process for households, which reduced our profit estimates starting 2016e by more than 20% versus our former forecasts. * Even so, with the price increases that took place since the beginning of 2013, we estimate 2014e net profit would be 50% higher yoy at RON 1.5 bn and remain close to this level for the next three years (DY between 8% and 9% over the medium term). * Given that Romgaz’s pricing is mostly regulated, we decided to reduce the beta over the medium term to reflect the lower volatility driven by pricing and thus the utility-like features of Romgaz. * We set our 12m TP at RON 39.5 (previously RON 39.0), the lower cost of equity offsetting the weaker profit forecasts, but given the limited upside potential versus the current market price we reduce our recommendation to “HOLD”. We updated our estimates with weaker domestic gas price assumptions, triggered by a lower price for industrial consumers and a delay of the liberalization process for households. As such, starting 2016e, we see the net profit more than 20% lower versus our former estimates (dated February 2014). Despite these struggles, profitability wise, one cannot ignore that Romgaz is a different company from two years ago. We estimate 2014e net profit would be 50% higher yoy at RON 1.5 bn and for the next three years, assuming no major setbacks in pricing, net profit could stay at around RON 1.5-1.6 bn (2014e-21e CAGR of 3.3%). With the adopted 75% dividend pay-out policy this would translate into stable DY between 8% and 9% over the medium term, lower however than our previous expectations when we were seeing the yields to come closer to 12% starting 2016e. Given that Romgaz’s pricing is mostly regulated, we decided to reduce the beta to 0.9 over the medium term to reflect the lower volatility driven by pricing and thus the utility-like features of Romgaz. In addition, we decreased the medium term risk free rates to accommodate the drop in treasury bond yields. We set our 12m TP at RON 39.5 (previously RON 39.0), the lower cost of equity offsetting the weaker profit forecasts. Given the limited upside potential versus the current market price we reduce our recommendation to “HOLD”. We assume a gradual alignment of the domestic gas price for non-households towards European gas prices, and we see it averaging in the medium term EUR 24/MWh while in our previous update we were assuming the price would touch EUR 27/MWh. We also took into account the delay in the liberalization of the domestic gas price for households to July 2021 (from end-2018), as recently adopted by the Chamber of Deputies. 2Q 2014 results exceeded expectations with a lift in volumes delivered of 29% yoy, backed by an increase in sales to the key suppliers in Romania and to the Bucharest thermal heating provider, we suspect driven by the accumulation of stocks for winter. Ca. 58% of Romgaz’s 2Q sales were at the price for households and thermal heating suppliers. For FY 2014e we see a 4% yoy increase in volumes sold, partially driven by sales from stock, while we expect production to remain flat yoy. We see E&P result up 50% yoy in 2014e, propped by a 30% rise in the average realized domestic gas price and despite losses from receivables of RON 176 mn in 1H. For storage, given the regulated status of the business, we expect marginal increases in EBT going forward (CAGR 3% over 2013-2020e). The “other” segment outperformed strongly our expectations in 1H 2014, the EBT reaching RON 117 mn, 4x higher yoy. The surge came on the back of high other revenues, mostly penalties for late payment, which we suspect are related to domestic gas sales. We do not expect such strong performance to be sustainable. Iuliana Mocanu 11. Rosatom risks Greenpeace October 7, 2014 Rosatom, the state nuclear corporation of Russia, is actively pursuing expansion domestically and abroad, despite the decline of the nuclear industry globally.1 Rosatom is a questionable business partner, plagued by concerns over corruption, the safety and quality control standards of its nuclear reactors, its competence at building and operating nuclear plants, its model for financing projects, and concerns over its ability to complete construction on time and on budget. While Rosatom is the focus of this report, Greenpeace has campaigned extensively against other nuclear companies. For years Greenpeace has identified the risks of reactors from Areva in France, General Electric (GE) in the US, Atomic Energy of Canada Limited (AECL) in Canada, Toshiba and Hitachi in Japan, various reactors in South Korea, India, Turkey, Europe and elsewhere. In addition, Greenpeace takes on the nuclear policies of countries that put their citizens at risk by developing and promoting dangerous nuclear power. Rosatom optimistically projects significant increases in foreign orders at a time when nuclear power is outpaced and overpriced, and is in competition with modern, safe, clean and affordable renewable energy alternatives, such as solar PV and wind power. Although Rosatom has recently broadened its foreign portfolio by bidding on projects in well-established nuclear states, at the heart of its expansion dream is its new business model of "Build-Own-Operate" (BOO). Under this model, Rosatom offers to attend to all aspects of construction and operation of a nuclear project. Theoretically, this model would allow a nation to become a nuclear state even though it has little to no knowledge and infrastructure in place to support operation and oversight of a nuclear reactor. Close examination of Rosatom's track record shows the Build-Own-Operate model is not an ideal arrangement for foreign clients. The concerns over Rosatom as a business partner, as well as the risks embodied in its offer, under the model, to take back spent nuclear fuel generated at its reactors in other countries raise serious red flags for any country considering doing nuclear business with Rosatom. In addition, not only does the model increase dependency on Rosatom to operate nuclear reactors, it also increases dependency on imported uranium.2 Rather than achieving energy independence and security, countries would be going in the opposite direction. In 1991, when it was created, the Russian Federation inherited the nuclear programme of the former Soviet Union, which had placed the responsibility for both civil and military programmes within the purview of the same agencies. This inheritance brought with it a culture of secrecy and significant safety concerns. PostSoviet disorder resulted in corruption. Although Rosatom is a fairly new entity, it is the successor agency to both Soviet and post-Soviet state nuclear agencies. Some things undoubtedly remain unchanged. One of Rosatom's predecessor agencies oversaw the worst nuclear disaster in world history. While Rosatom claims to have learned from the Chernobyl catastrophe and improved the safety of its reactors, it continues to operate Soviet-era reactors, and has completed construction of three reactors that were started under the Soviet government. The safety of these old reactors and reactor designs, as well as the safety of new designs, could be compromised by the apparent and significant concerns with Rosatom about corruption and quality control. Rosatom has also repeatedly failed to deliver its reactor construction projects abroad on time and on budget, and has failed to meet its own projections for expansion. Although Rosatom receives significant financial backing from the Russian government, financial analysts are already voicing scepticism3 as to whether Rosatom could financially support its foreign expansion goals under the BOO model. However, should other countries agree to binding nuclear contracts, similar to the contract Hungary signed in April 2014 with this Russian state corporation, the burden, financial risks and cost overruns for which Rosatom is known would be borne by the foreign governments and taxpayers. Further, although Rosatom's offer to take back and reprocess highly radioactive spent fuel from its foreign reactors appears to offer a solution to the unsolvable burden of nuclear waste, this is hardly a solution to the waste problem. There will still be onsite risks since the radioactive waste must be cooled for years before it can be transported. In addition, the transport of nuclear waste itself would put communities along the route at risk, while the final reprocessing in Russia would generate an even greater volume of radioactive wastes. Reprocessing has been rejected in some nations, such as the US, due to the increased risks of the proliferation of nuclear bombs from reactor-grade, but weapons-usable plutonium. The Russian Federation claims the reprocessed waste would be used for its fast- breeder reactor programme, not only has the programme been a failure - as such programmes have been in every nation - but the Russian government already has one of the largest stockpiles of reactor-grade, weaponsusable plutonium in the world.4 Rosatom's offer to reprocess spent foreign fuel would only increase Russia's stockpile of dangerous plutonium for no apparent or immediate use. Finally, Rosatom has secured a legislative loophole5 that would allow it to ship the radioactive wastes generated by reprocessing back to the country of origin - thus creating a problem that the countries that sign into a reprocessing deal with Rosatom would likely be seeking to avoid. In sum, Rosatom presents considerable and troubling problems as a potential business partner, from finance to performance to significant safety concerns. 12. Turkey, the Kurds and Iraq: The Prize and Peril of Kirkuk Stratfor October 8, 2014 In June 1919, aboard an Allied warship en route to Paris, sat Damat Ferid Pasha, the Grand Vizier of a crumbling Ottoman Empire. The elderly statesman, donning an iconic red fez and boasting an impeccably groomed mustache, held in his hands a memorandum that he was to present to the Allied powers at the Quai d'Orsay. The negotiations on postwar reparations started five months earlier, but the Ottoman delegation was prepared to make the most of its tardy invitation to the talks. As he journeyed across the Mediterranean that summer toward the French shore, Damat Ferid mentally rehearsed the list of demands he would make to the Allied powers during his last-ditch effort to hold the empire together. Read more here: http://www.stratfor.com/weekly/turkey-kurds-and-iraq-prize-andperil-kirkuk#axzz3FOXSrneP SE OTHER NEWS 13. Bulgaria's GERB to Start Talks on New Gov't Monday Novinite October 8, 2014 Conservative GERB party, which won the early elections on October 5, will hold a first round of negotiations on a next cabinet on Monday, October 13, party officials say.‚Ä®‚Ä®The center-right Citizens for European Development of Bulgaria (GERB)'s first interlocutor will be the Bulgarian Socialist Party (BSP), which came second though running neck-and-neck with the Movement for Rights and Freedoms (DPS). Read more here: http://www.novinite.com/articles/163911/Bulgaria's+GERB+to+Start+Talks+on+Ne w+Gov't+Monday 14. Grey economy in Croatia much above European average Dalje October 9, 2015 Grey economy in Croatia amounts to 13 billion euros or about 28% of GDP, which is around the average in eastern European countries but much above the European average of 18.5%. This is shown by a survey on the grey economy and its connection to electronic payment conducted by Visa Europe, the consulting firm A.T. Kearney and expert Friedrich Schneider. Read more here: http://dalje.com/en-croatia/grey-economy-in-croatia-much-aboveeuropean-average/524342 15. LUKoil Seeks European Cash for Project Undercutting Gazprom's South Stream The Moscow Times October 8, 2014 While the future of the gigantic South Stream natural gas pipeline from Russia to Europe remains mired in uncertainty, an alternative project is gaining momentum. LUKoil Overseas, the international subsidiary of Russia's largest private oil company, has asked the European Bank for Reconstruction and Development (EBRD) for a $1 billion loan to further develop the Shah Deniz gas field in Azerbaijan, the Prime news agency reported late Monday, citing EBRD materials. Shah Deniz — Azerbaijan's largest gas field — aims to deliver gas from the Caspian Sea to Turkey and Europe. When fully utilized, output is expected to rise from the current 9 billion cubic meters per year to 25 billion cubic meters. Ten billion of this is to be sent to Greece, Italy and Bulgaria via the Trans Adriatic Pipeline, work on which is expected to start next year. The $28 billion Shah Deniz project unites a consortium of European energy companies, led by BP. LUKoil owns a 10 percent share. Read more here: http://www.themoscowtimes.com/article/508575.html 16. Moldovan authorities fine 4 TV channels for re-broadcasting Russian programs TASS October 8, 2014 Moldova’s authorities have on Tuesday fine to four local TV channels re-broadcasting Russian programs over "anti-Ukrainian coverage of the armed conflict in eastern Ukraine." Read more here: http://en.itar-tass.com/world/753186 17. Montenegro Puts Leading Defense Company Up for Sale Defence News October 8, 2014 Montenegro’s government has decided to sell the country’s leading defense company, state-owned Montenegro Defence Industry (Vojna Industrija Crne Gore). The Montenegrin government’s Privatization and Capital Investment Council is handling the privatization process. All bidders willing to acquire a 100 percent stake in the firm are to submit offers by Oct. 15, the agency said in a statement. Read more here: http://www.defensenews.com/article/20141007/DEFREG01/310070038/MontenegroPuts-Leading-Defense-Company-Up-Sale 18. Romanian senator, former minister get jail sentences in Rompetrol refinery stock manipulation Romania Insider October 8, 2014 The Bucharest Appeal Court recently sentenced Romanian journalist and senator Sorin Rosca Stanescu to two years and four months in jail, no parole, in the Rompetrol case, one of the most high profile trials in Romania. Former communications minister Sorin Pantis was also sentenced to two years and eight months in jail. Read more here: http://www.romania-insider.com/romanian-senator-formerminister-get-jail-sentences-in-rompetrol-refinery-stock-manipulation/133031/ 19. Russia's LUKOIL begins oil refinery startup in Romania TASS October 8, 2014 Russia’s LUKOIL company has begun the technological procedure to start a refinery in Romania after its operation was halted by Romanian authorities, a company source told TASS. After the hearings over the company’s appeal on October 6, 2014, the arrest of the company’s bank accounts and commercial reserves was suspended, and LUKOIL began the procedure to start the Petrotel refinery, LUKOIL press secretary Vitaly Matushkin told TASS. Read more here: http://en.itar-tass.com/economy/753049 20. Serbia’s 23% Pile of Bad Loans Lures Distressed Debt Funds Bloomberg October 8, 2014 Buyers of distressed debt are being lured by the prospect that Serbia will clean up its financial system amid mounting pressure from international creditors. EOS Matrix, the Belgrade-based unit of Germany’s EOS, a company that began as a Hamburg debt-collection service, said it’s in talks with more banking clients after buying Serb non-performing corporate loans for 18 million euros ($23 million) in December. The junk-rated former Yugoslav republic needs to convince the International Monetary Fund that it’s working to stabilize the economy or risk being shut out of debt markets, a watchdog appointed by parliament said last month. Read more here: http://www.bloomberg.com/news/2014-10-07/serbia-s-23-badloans-lure-distressed-funds-east-europe-credit.html