Published: December 1, 2010
Black Sea Trade and Development Bank receives rating upgrade.
What a difference a letter makes. A recent credit rating upgrade for the Black Sea Trade and Development Bank (BSTDB) – a development finance institution owned by 11 governments across the Black Sea region – looks set to open new funding opportunities for the bank and make life easier for businesses relying on its support.
That’s particularly welcome news for Valentina Siclovan, who took over as the bank’s vice-president of finance in September. The upgrade from agency Moody’s, to A3 from Baa1, should make the bank more competitive as a lender and may even make her job easier.
Siclovan has been with the BSTDB since its establishment in 1996 – first as its board member representing her native Romania, then as vice-president for banking, and later taking charge of support operations. She tells emeafinance she now considers her “career cycle within the bank as being fulfilled” after working across these divisions. “I know the bank, the people, the products, the region,” she says.
Nonetheless, it’s a challenging time to take charge of the bank’s finances. “The region in which the bank operates is highly interconnected with the rest of the world, with a very strong dependence on capital and foreign demand, which rendered it vulnerable during the global financial crisis,” Siclovan says.
The bank’s focus today is on small and medium-sized businesses struggling to secure growth capital in the aftermath of the downturn. “Blue chip firms already can easily get financing on the market,” Siclovan says. “We’ll be more interested to finance second-tier firms that represent an excellent potential for growth but due to market conditions lack full and affordable access to capital markets.”
Siclovan and colleagues are now finalising a medium-term strategy to take the BSTDB from 2011 to 2014. At the heart of that is accessing new funding. Competing with other finance institutions that cover the region hasn’t always been easy – many can offer loans at lower interest rates given their own lower cost of borrowing and triple-A credit ratings, Siclovan says. That’s where the BSTDB’s rating upgrade should make a difference.
The finance chief describes the upgrade as a “big achievement” – indeed, the bank’s new rating is higher than that of any of its member countries (Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and Ukraine). “This will open new opportunities for better cost of funds and increased availability of such funds,” she says, adding that the bank is likely to become “more and more dependent” on debt markets to raise new funds. She expects the bank to issue a bond during 2011.
Siclovan is optimistic about the economic outlook for the region. “As always, this region has an interesting, big potential,” she says, adding that regional governments have shown themselves to be “committed to structural reform and fiscal sustainability”.
“In a couple of years we can see GDP growth in the Black Sea region as it was some time ago, returning to the annual real rate in the order of 5-6%, as in the boom period,” she says. Perhaps the BSTDB will play an even greater part in that than was once expected.