Ukreximbank plans to amortize the 2015 bond in 7Y, raise coupon

On April 20, the State Export-Import Bank of Ukraine (Ukreximbank, EXIMUK) presented its planned parameters of restructuring its USD 750 mln Eurobond which matures on April 27, 2015. If the bond holders accept an earlier request for the 3-month delay of the bond’s maturity, the bank will offer to increase the coupon rate of the bond to 9.625% (from the current 8.375%) staring from April 27. It also will offer to accept a new repayment schedule: 50% will be repaid in four years (on Apr. 27, 2019) and the remainder will be repaid in six semi-annual installments between Oct. 27, 2019 and Apr. 27, 2022.

The bank will also seek to secure that the Ukrainian government issues a letter of intention to assist the bank in ensuring the fulfillment of its international obligations. This letter, though, should not be considered as a state guarantee on the bond.

Last week, Ukreximbank hinted that its Eurobonds will be restructured in a way to extend their maturity (up to 10 years), meaning that no decrease in coupon or haircut is planned (unlike for state bonds).

A meeting of EXIMUK 2015 bond holders to consider a 3-month postponement of the bond’s maturity is scheduled for April 27. The previous meeting failed due to lack of quorum on April 13. A quorum at the new meeting is 33.3% (of total Eurobond outstanding) and the threshold to accept the resolution at the meeting is 75%.

Alexander Paraschiy: The planned coupon increase on the bond, as well as the planned duration that’s significantly less than the 10 years outlined earlier, is a positive surprise. We believe that this could have implications for all other Ukrainian quasi-state and state papers. In particular, the offered soft parameters of the restructuring suggests a weakness in the bank’s (and possibly the government’s) negotiating position in talks with debt holders. Moreover, such a “capitulation” of Ukreximbank may increase the appetites of holders of other Ukrainian state and quasi papers during their talks on restructuring. For that reason, we believe, the news from Ukreximbank can increase demand for all the Ukrainian state and quasi bonds in the coming days.

In our estimation, the outlined restructuring parameters of the bond offers an IRR to its extended maturity of 21.9% (based on the current price of 67% of par). This looks like a good enough offer for bond holders to accept the postponement on Apr. 27.

Источник: Конкорд Капитал