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As Southeast Europe returns to steady economic growth, the mergers and acquisitions (M&A) market in the region is picking up again and an increasing number of both local and foreign investors push ahead with expansion plans. Romania holds the largest share of the region's M&A market, as the value of deals struck in the country last year is estimated at $3.54 billion (3.58 million euro), according to global consultancy Ernst&Young (EY). The most active M&A sectors in the region are IT, manufacturing, and wholesale&retail.
The banking systems of the countries in Southeast Europe are largely seen as stable and economic recovery is expected to further support lending, in particular in countries which have been lagging behind so far. NPL ratios, which are currently high in some countries, are expected to decline. In Bulgaria, the forthcoming asset quality review of the banking system is likely to lead to the sale of bad loan portfolios and speed up the process of market consolidation.
The eletricity market of Southeast Europe is heating up after earlier in 2016 day-ahead power exchanges were launched in Bulgaria, Croatia and Serbia, opening up new opportunities for energy producers, consumers and traders. As a step towards achieving market coupling, in April the power transmission system operators, regulators and energy ministers of six countries in the Western Balkans signed a memorandum of understanding on the integration of their day-ahead markets.
The recent boom of low-cost carriers across Southeast Europe (SEE), particularly in Romania and Bulgaria, has created a new market which complements legacy airlines. Rising low-cost passenger numbers, especially in Romania and Bulgaria, are closely linked to the double-digit growth of international tourists to both countries in 2016. According to Bulgarian finance ministry data, more than 56% of foreign tourists who visited the country last year arrived by low-cost flights.
Croatia's largest privately-held concern Agrokor has been in financial turmoil since January when global ratings agency Moody's downgraded its corporate family rating (CFR) to B3 from B2. Following Moody's decision, Agrokor pulled out of a syndicated loan deal it had struck with several international lenders, which sent the price of its bonds on international markets into a downward spiral.