Ukraine MinFin warns on time constraints for CITKIE restructuring offer



27 ноября 2015 года
Конкорд Капитал

The Ministry of Finance of Ukraine stated on Nov. 26 it supports the exchange offer of Kyiv city Eurobonds (CITKIE) into a set of government Eurobonds and GDP warrants. The ministry stressed that the offer “represents a limited-time opportunity” for the bondholders as the exchange parameters are provisioned by Ukraine’s 2015 budget law, which expires as of the year end.

Recall, Kyiv city announced on Nov. 23 meetings of the holders of its two Eurobonds for Dec. 8 to vote for their exchange. Both Kyiv city Eurobonds (USD 250 mln, 8.0%, that matured on Nov. 6; and USD 300 mln, 9.375%, that matures on July 11, 2016) are being offered to exchange for 35% of the Ukraine 7.75% Eurobond that matures on Sept. 1, 2019; 35% of the Ukraine 7.75% Eurobond that matures on Sept. 1, 2020; and 25% in Ukraine’s GDP warrants. The interest on the Eurobonds accrued as of Nov. 2 will be exchanged 50/50 into government Eurobonds maturing in 2019 and 2020. The holders that won’t vote in favor of the exchange will only receive warrants for 23% of the par value of the existing bonds.

Earlier, the members of the ad hoc committee of Kyiv city bond holders criticized the offer, stating that it “does not represent the fair value of the holders.” The ad hoc committee members accumulated 38% of Kyiv city’s 2015 notes and 22% of the 2016 notes as of Nov. 10. That should be enough to block the exchange, given that the approval rate at the bondholder meetings is 75% (with a quorum of 2/3 for the Dec. 8 meeting and 1/3 for a possible adjourned meeting on Dec. 22).

Alexander Paraschiy: A positive market reaction to the announced offer (CITKIE’15 and CITKIE’16 bonds gained 7.7% and 6.3% since Nov. 23, respectively) suggests the bondholders are encouraged by the exchange offer. Therefore, we believe the exchange offer will be approved by the majority of bondholders on Dec. 8. As we highlighted before, we believe the MinFin’s offer for the city’s bondholders looks balanced.

Источник: Конкорд Капитал



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