Ukraine has announced the pricing of new eurobonds issued in euros in the amount of EUR 1 billion with maturity on June 20, 2026, the demand stood at EUR 6 billion. “The notes will bear interest at the rate of 6.75% per annum,” the Ministry of Finance said in a statement on its website. “The new issue is expected to be rated “B-” by Standard & Poor’s and “B-” by Fitch,” the report said.
“Settlement of the new issue is expected to take place on June 20, 2019,” the ministry said.
“The proceeds of the notes will be used for general budgetary purposes,” the document reads.
JSC Ukrzaliznytsia has paid off the first part of loan participation notes (LPN, eurobonds) in the amount of $150 million and paid the coupon on them, the company has reported on its website.
Ukrzaliznytsia Board Chairman Yevhen Kravtsov said that a loan for refinancing of the debt was raised on the domestic market. Oschadbank and the State Agency for Infrastructure Projects of Ukraine provided the funds.
“The funds were borrowed in the national and foreign currencies, and the currency-pegged liabilities were met. This additionally cut the potential risks for seeing exchange rate losses,” Kravtsov said.
He said that the payment on the bonds in due time again confirms support of the railway sector by the state and financial stability of Ukrzaliznytsia. It also shows to creditors that the state and company have a responsible attitude to servicing own debts.
As reported, Ukrzaliznytsia in May 2013 placed its debut $500 million eurobond issue with a maturity period of five years through the specially created company Shortline Plc.
Eurobonds of Ukrzaliznytsia, together with the securities of Oschadbank and Ukreximbank, were included in the restructuring of the external sovereign and government guaranteed debt initiated by the Ministry of Finance of Ukraine after the IMF approved a new four-year extended fund facility for Ukraine for $17.5 billion.
In March 2016, Ukrzaliznytsia restructured its eurobonds, prolonging the maturity until September 15, 2021 and raising the interest rate from 9.5% to 9.875% per annum. Also, the repayment schedule for the principal loan amount was changed: 60% should be paid in 2019, 20% in 2020 and 20% in 2021.
At the end of 2018, the supervisory board of Ukrzaliznytsia, together with the Ministry of Infrastructure and the Verkhovna Rada Committee on Transport, stated the need to restructure Ukrzaliznytsia’s debt obligations in order to increase the borrowings pegged to the national currency.
In April 2018, Ukrzaliznytsia announced that it was considering the possibility of implementing a new issue of eurobonds pegged to the hryvnia in the amount of UAH 500 million to UAH 1 billion for a period of three to five years before the end of this year, and also received coordination by the ministries to issue domestic bonds with a total amount of UAH 2 billion.
The volume of placement of the five-year tranche of Ukraine’s eurobonds will be $750 million, that of the ten-year one some $1.25 billion, a source in the banking circles has told Interfax. Thus, the country is placing eurobonds worth $2 billion. The yield of the five-year tranche (it is “long,” maturing in February 2024) was 9% per annum, the ten-year tranche some 9.75%. The initial reference point was about 9.25% and about 10% respectively.
The volume of the order book amounted to $4.9 billion.
As reported, the organizers of the issue of Ukraine’s eurobonds are BNP Paribas, Citi, Goldman Sachs and J.P. Morgan. Ukraine plans to use funds from eurobond placement to repay 2019 eurobonds worth $725 million, as well as for general budget purposes.
The UK’s Court of Appeal, which is considering the Russian-Ukrainian dispute over $3 billion in eurobonds issued by Kyiv, has decided to study the Ukrainian side’s argument that eurobonds were issued under pressure from the creditor, in this case Russia, the Russian Finance Ministry said in a statement, indicating that Law Debentures Trust will appeal to the Supreme Court regarding this argument on behalf of the Finance Ministry.
“Today, the UK’s Court of Appeal rendered a verdict on Ukraine’s appeal of the London High Court ruling obligating Ukraine to redeem its debt and pay interest on a bond issue acquired by Russia with funds from the National Wealth Fund. The Court of Appeal confirmed the lawfulness of the refusal to grant Ukraine consideration of three of the four arguments stated in order to avoid meeting its obligations with respect to these eurobonds,” the statement said.
“Earlier, the London High Court did not grant consideration of all of the argument stated by Ukraine, determining that they did not minimal criteria for their consideration in full-fledged court proceedings envisaging the calling of witnesses, consideration and analysis of documents, as well as other evidence presented by the parties to the dispute,” the statement said.
The Court of Appeal rendered a judgment on the necessity of conducting legal proceedings in order to determine the presence or absence of evidence supporting the remaining, fourth Ukrainian argument, which alleges that the borrower issued eurobonds under pressure from the creditor, that is Russia, the statement said. At the same time, the Court of Appeal did not confirm the rightness of the defense’s fourth argument, and only declared that that argument, as opposed to the other three arguments made by Ukraine, cannot be dismissed without conducting comprehensive legal proceedings.
Ukraine’s fourth argument, much like the other three arguments, must also be dismissed without legal proceedings, the Russian Finance Ministry said. For this reason, the Ministry has requested that Law Debenture Trust Corporation plc, as the eurobond trustee, to file an appeal with the UK’s Supreme Court regarding the decision on Ukraine’s fourth argument.
State-owned Oschadbank (Kyiv) on September 10, 2018 paid the $32.8 million coupon on restructured $700 million eurobonds in full amount and in accordance with the issue terms, the press service of the bank has told Interfax-Ukraine.
The yield on eurobonds is accrued and paid twice a year – on March 10 and September 10.
As reported, in 2015, Oschadbank restructured eurobonds maturing in 2016 and 2018 for a total of $1.2 billion. Under the agreement, eurobonds were issued for the amount of $700 million due on March 10, 2023 and with the yield of 9.375% per annum, for $332.914 million due on March 20, 2025 and the yield of 9.625% per annum and $167.086 million due on March 20, 2025 and the yield 8.25% per annum.
In addition, eurobonds were issued for $100 million with maturity up to 2024 after restructuring the subordinated loan for the corresponding amount.
Oschadbank was founded in 1991. Its only owner is the state.
Oschadbank ranked second among 84 banks operating in the country on June 1, 2018 in terms of total assets (UAH 236 billion), according to the National Bank of Ukraine.
The National Bank of Ukraine (NBU) expects the country’s Finance Ministry will place $2.5 billion in eurobonds in 2018, $1.5 billion in eurobonds in 2019. “In 2018 and 2019, we expect that eurobonds worth $4 billion will be placed: $2.5 billion this year and $1.5 billion next year,” Deputy NBU Governor Dmytro Solohub said at a briefing in Kyiv on Thursday.