ESCP Ukraine Markets Daily (September 04, 2017)

Market news

  • Ukraine paid USD 505 mn on restructured Eurobonds
  • Metinvest intends to make an early payment of interest on and a partial redemption of its outstanding Notes on 18 September 2017

Market comment

The UX index increased by 0.6% on Friday and the PFTS index increased by 0.2% (in UAH terms). The WIG-Ukraine increased by 2.0%. On the interbank exchange market, the USD/UAH was up by 0.4% to UAH 25.76 (mid price), according to Thomson Reuters. The official exchange rate reported by the NBU was UAH 25.69.


Ukraine paid USD 505 mn on restructured Eurobonds

On September 1 the Ministry of Finance of Ukraine repaid the fourth coupon worth USD 505 mn on restructured Eurobonds issued in September-November 2015. The outstanding amount of these nine issues, with the maturity date of September 1 of the corresponding year from 2019 to 2027, is USD 12.97 bn with an annual 7.75% coupon which is accrued and paid twice a year: on March 1 and September 1.

Our view:

This coupon payment is a good sign for the bondholders, confirming Ukraine’s ability to service its foreign debt in a short- and long-term run, considering the amount of the foreign currency reserves at the level of USD 13.5 bn (as of July 2017). But the real test of the country’s solvency will be held during the years 2019-2021 with the maturing of the earliest Eurobonds issues.


Metinvest intends to make an early payment of interest on and a partial redemption of its outstanding Notes on 18 September 2017

According to the announcement on the Irish Stock Exchange dated September 1, 2017, Metinvest intends to apply USD 20 mn on September 2017 to discharge certain of its liabilities under the Notes and the PXF facility, of which USD 13 mn will be applied to pay interest on and redeem a portion of the Notes. The USD 6.7 mn payment will be applied to pay the Notes PIYC Interest Amount accrued for the period from 18 August 2017 up to 18 September 2017 at the annual rate of 6.58%. Meanwhile, other USD 6.3 mn will be applied to redeem PIK Notes, which in fact had been capitalized from the unpaid PIYC Interest Amount. Current aggregate principal amount of the Metinvest’s Notes is USD 1,224 mn (including USD 26.5 mn of aggregate principal amount of PIK Notes). After the PIK Notes redemption on 18 September 2017 the aggregate principal amount of the Notes will be reduced to USD 1,217 mn (including USD 20.1 mn of PIK Notes).

Our view:

We think that such move made by Metinvest proves the fact that the Company’s current financial state is quite good, which can be explained by the increase in export revenue against the backdrop of the global iron ore prices growth. So the Company uses this temporary opportunity to reduce its long-term debt pressure by cutting down its amount of principal outstanding.


Although the information in this report has been obtained from sources which Empire State Capital Partners believes to be reliable and was collected in good faith, we do not represent or warrant its accuracy, except with respect to information concerning Empire State Capital Partners, its subsidiaries and affiliates, either expressly or implied, and such information may be incomplete or condensed. Nor has the information and/or data been independently verified, and so is provided without further caveat regarding its reliability, suitability for commerce or specific purpose. This report does not constitute a prospectus and is not intended to provide the sole basis for an evaluation of the securities discussed herein. All estimates and opinions included in this report constitute our judgment as of the date of the report and may be subject to change without notice. Empire State Capital Partners or its affiliates may, from time to time, have a position or make a market in the securities mentioned in this report, or in derivative instruments based thereon, may solicit, perform or have performed investment banking, or other services (including acting as advisor, manager) for any company referred to in this report and may, to the extent permitted by law, have used the information herein contained, or the research or analysis upon which it is based, before its publication. Empire State Capital Partners will not be responsible for the consequences of reliance upon any opinion or statement contained herein or for any omission. This report is confidential and is being submitted to select recipients only. It may not be reproduced (in whole or in part) without the prior written permission of Empire State Capital Partners. Any recommendations, opinions, forecasts, estimates or views herein constitute a judgment as at the date of this report. This document has been produced independently of Empire State Capital Partners and the recommendations, forecasts, opinions, estimates, expectations, and views contained herein are entirely those of the research analyst(s). While all reasonable care has been taken to ensure that the facts presented herein are accurate and that the respective recommendations, forecasts, opinions, estimates, expectations, and views are fair and well considered, none of the research analyst(s), Empire State Capital Partners or any of its directors, managers or employees has verified the contents of this document and, accordingly, no research analyst, Empire State Capital Partners or any of its respective directors, managers or employees shall be in any way responsible for its contents.

Kind regards

Research Team