28 Jul 2022 15:49

Ukravtodor follows sovereign issuer in proposing that Eurobond holders accept two-year delay in payments

MOSCOW. July 28 (Interfax) - The State Agency of Motor Roads of Ukraine (Ukravtodor), which last June placed $700 million in debut Eurobonds maturing in 2028 at 6.25% under government guarantees, has approached bondholders with a proposal to defer payments on these securities for two years and extend their circulation term by two years, stressing that this proposal is a continuation of a similar proposal made by Ukraine on July 20.

"The proposal provides Ukravtodor with an exemption from liquidity outflows ... for 24 months, allowing it to focus its available financial resources on necessary efforts to rebuild and maintain Ukraine's road network," Ukrainian media reported, citing the company's London Stock Exchange filing on Thursday.

Given the large amounts of emergency budget support currently provided by international partners to the government of Ukraine for financing, Ukravtodor believes the further servicing of its external debt temporarily inadvisable.

"Ukravtodor is asking that holders approve the proposed changes on terms substantially similar to those proposed by Ukraine, the guarantor of the securities, in light of the request for consent to issue Eurobonds," the document reads.

Applications from Eurobond holders will be accepted until the end of the working day on August 9, and the announcement of the results is expected on August 10.

The company has specified that upcoming payments on Eurobonds starting December 24, 2022 and those following them be postponed to December 24, 2024. During this period, they will accrue interest at the current rate.

On July 20, Ukraine proposed that holders of sovereign Eurobonds accept a delay in payments and extended circulation of the issues from August 1, while maintaining the current rate of return.

In turn, Ukraine's international partners within the G7 and the Paris Club of creditors declared their readiness to suspend payment of Ukraine's debt until the end of 2023 with the possibility of extending the postponement for another year. They also urged private creditors to accept Ukraine's proposal to trim payments on its Eurobonds and to change the terms of GDP-linked warrants.

According to data on the Frankfurt Stock Exchange website on Thursday, Ukravtodor's Eurobonds were quoted at 17.27% of face value, slightly below the quotation of Ukraine's sovereign Eurobonds of the same year of maturity (about 20.7%).

The government of Ukraine via its Decree No. 829 dated July 26 approved the terms of the proposed transaction with the Eurobonds of Ukravtodor, extending the guarantee for a proposed deferral period of 24 months.