22 Apr 2022 11:42

Sovcombank to offer Eurobond holders opportunity to exchange for new issue of local bonds

MOSCOW. April 22 (Interfax) - Sovcombank, which is subject to blocking sanctions and has been experiencing technical issues with effecting payments on its dollar-denominated Eurobonds, plans to offer bondholders the opportunity to exchange their Eurobonds for the bank's new issue of local subordinated bonds, thereby allowing investors to receive payouts that bypass the international payment infrastructure, the credit institution said in a statement.

On April 21, the bank paid in rubles a coupon on short-term subordinated Eurobonds maturing in 2030 to those holders whose rights to the bonds are accounted for by the National Settlement Depository (NSD), according to the statement.

Meantime, no payments have been rendered in favor of the Eurobond issuer, Sovcom Capital. Effecting payments in favor of the issuer of Eurobonds as stipulated in the documentation is not yet possible, and the bank continues to work with regulators and paying agents to pay coupons to holders in international depositories, Sovcombank noted.

"However, there is still high uncertainty regarding the possibility of these interest payments in the future, both in favor of the agent and in favor of the holders in the NSD owing to conflicts between applicable Russian and foreign law," the credit institution said in the statement.

In this regard, Sovcombank plans in the near future to register a new issue of short-term local subordinated bonds, and offer its Eurobond holders the opportunity to exchange them for the new Russian ones, thereby enabling the bondholders to receive payments directly in Russia that bypass the international payment infrastructure, the bank said.