30 Mar 2022 16:24

RZD, ChelPipe encounter problems with coupon payments on Eurobonds

MOSCOW. March 30 (Interfax) - Russian companies directly or indirectly affected by the sanctions continue to report problems with coupon payments on Eurobonds. Russian Railways (RZD) and Chelyabinsk Pipe Rolling Plant (ChelPipe) disclosed that they were unable to make coupon payments on time.

According to RZD, the company attempted to transfer the interest payment on 2026 Eurobonds in Swiss francs, but the eurobond issuer, RZD Capital, did not receive funds for the coupon payment due to "legal and regulatory compliance obligations of its correspondent banking network." As such, the coupon payment, which was due on March 14, was not made.

The company placed an issue of "green" Eurobonds totaling 250 million Swiss francs in 2020. The coupon on it is paid once a year.

Chelpipe reported problems with payments in its reporting to IFRS. The coupon payment on dollar-denominated Eurobonds was due on March 21.

The company made interest payments as required, but as a result of blocking of payment by the correspondent bank, Citibank, interest payment was not made on the specified date, the report indicates. As of the date of publication, the funds remain blocked by the correspondent bank, which is a potential event of default on Eurobonds, of which the company has notified the issuer and the bond trustee, ChelPipe said, stressing that the company is taking all possible steps to unblock the funds.

The 2024 Eurobond totaling $300 million was the debut for ChelPipe, and the coupon is paid twice a year. The plant is part of the TMK group, whose founder, Dmitry Pumpyansky, previously fell under EU sanctions. After that, he withdrew from the list of TMK beneficiaries.

Amid unprecedented sanctions imposed on Russia, a number of Russian borrowers have begun to report technical problems with payments on Eurobonds in recent weeks. Severstal , EuroChem, SUEK and RusHydro have already announced the blocking of payments at various stages. Russian Railways, which is on the U.K. sanctions list, has already reported two payments in limbo.