Ukrainian Railways analyzing potential Eurobond solutions - annual report

MOSCOW. May 19 (Interfax) - Ukrainian Railways is analyzing potential comprehensive solutions for Eurobonds and improving liquidity, Ukrainian media reported, quoting the national railway operator's 2024 annual report, published on the Economy Ministry's website.

"The company is due to repay a significant portion of Eurobond debt in July 2026. This, combined with the need to finance capital expenditure and current expenses for undisrupted rail transportation and post-crisis recovery, brings uncertainty over Eurobond redemptions," the report says.

The company in January 2025 capitalized coupon payments deferred as a result of a restructuring in 2022 on $108.28 million of 8.25% Eurobonds maturing in 2026 and on $51.9 million of 7.875% bonds maturing in 2028. This increased these issues to $703.18 million and $351.9 million, respectively.

The company in January 2025 paid $38.27 million payments on coupons for the period between July 2024 and the date of capitalization.

"As of December 31, 2024, the company was complying with all financial and non-financial terms of issued Eurobonds and interest-bearing loans and borrowings, and was also settling its financial obligations in a timely manner. The company also plans to service its loan portfolio in a timely manner going forward," the annual report says.

Ukrainian Railways on December 16, 2024, solicited the consent of Eurobond holders to defer coupon payments due in January and July 2025 until January 2026, like it did two years earlier, but this time it was unable to obtain that consent. The company said the payments needed to be frozen for another year due to a significant drop in freight traffic in the second half of 2024, a sharp increase in costs due to inflation and high uncertainty over whether tariff increases might be approved.

"The company appreciates the backing of Eurobond holders who voted for the 2024 consent and were alongside the company at such an unprecedented moment. The company expects to continue negotiations with Eurobond holders in the prescribed manner," it said in a press release following this unsuccessful attempt.

The next coupon payments on 2026 Eurobonds are due on July 9, and on 2028 bonds on July 15.

Ukrainian Railways 2026 bonds traded at 85.27% and 2026 bonds at 78.58% on the Frankfurt Stock Exchange at the end of last week.

The Economy Ministry says Ukrainian Railways accounts for more than 80% of freight about 36% of passenger traffic in the country. The company is Ukraine's biggest employer with more than 190,000 employees and operates a network of more than 19,000 km, of which more than 9,300 km are electrified. The balance sheet includes more than 1,400 stations, a fleet of locomotives and freight and passenger cars.

Revenue grew 11.1% to UAH 102.87 billion in 2024, which the company closed with a net loss of UAH 2.71 billion, compared with profit of UAH 5.04 billion in 2023.