Belarusian Finance Ministry transfers funds in nat'l currency to Eurobond holders from Russia, Armenia, Belarus

MINSK. Dec 7 (Interfax) - Belarusian Finance Ministry has transferred Eurobond payments in Belarusian rubles to holders of the securities from Russia, Armenia, and Belarus, according to their respective applications, the ministry said in a statement posted on its website.

"On December 6, 2022, payments were remitted to holders of Eurobonds of the Republic of Belarus, as previously fulfilled by the Finance Ministry, and reserved on an account with Belarusbank. Payments in Belarusian rubles were remitted to the accounts of holders from Russia, Armenia, and Belarus, who submitted applications," according to the statement.

The Ministry Finance notes that work to meet the requirements of holders of dollar-denominated Eurobonds in Belarusian rubles will continue. The agency is additionally working on "the issue of the most convenient options for fulfilling obligations under Eurobonds of the Republic of Belarus."

"We see that the central depository of the Republic of Belarus can focus on information about the owners of Belarusian Eurobonds, for example, Russia's National Settlement Depository (NSD), which is open for cooperation. The approaches of Western infrastructure organizations are far from constructive," according to the message.

"We note the limited participation of Western holders in implementing the proposed procedures, primarily owing to the current Western sanctions and their unwillingness to work with Belarusian rubles. Moreover, Western clearing systems continue to ignore requests from the Finance Ministry to provide registers of Eurobond holders for additional verification of holders in order to avoid cases of fraud," the Finance Ministry emphasized.

The government and the National Bank of Belarus previously adopted a joint resolution that allowed the Finance Ministry to render current payments on Eurobonds in Belarusian rubles, as well as to restructure the debt on Eurobonds on the terms and conditions proposed to the holders.

The Finance Ministry at the end of September offered Eurobond holders to replace Eurobonds with domestic government bonds or take advantage of early redemption of Eurobonds at a 70% discount. Investors were also offered to receive directly the previously paid coupon income in Belarusian rubles.

Belarus has five Eurobond issues in circulation totaling $3.25 billion. Belarus last entered the Eurobond market in June 2020, when it placed 5-year Eurobonds totaling $500 million at 6.125% per annum and 10-year Eurobonds totaling $750 million at 6.375% pa. Over 50% of the investors in the structure base were U.S. residents.

S&P Global Ratings and Fitch Ratings had previously downgraded the ratings on all issues of Belarusian Eurobonds to the default level "D", and the country's sovereign credit rating in foreign currency to pre-default "SD" (S&P) and "RD" (Fitch) following the Belarusian authorities' decision at the end of June this year to pay coupons on Eurobonds in Belarusian rubles rather than in U.S. dollars.

The Finance Ministry in June and August paid coupons on bonds in the national currency three times, noting that Citibank N.A. London Branch had access to the funds, and the Belarusian authorities continue to consider Citibank N.A. London Branch to be the paying agent although Citibank on July 7 refused to be an agent in relation to Belarusian Eurobonds. According to the Finance Ministry, the paying agent did not apply for funds to Belarusbank.