10 Jan 2023 14:39

Belarus to redeem $800 mln of 2023 bonds in local currency in Feb - MinFin

MINSK. Jan 10 (Interfax) - Belarus will redeem $800 million of Belarus-2023 bonds in Belarusian rubles in February, First Deputy Finance Minister Dmitry Kiyko said.

"We will have to redeem Eurobonds worth about $800 million in February. There are certain problems due to the sanctions that have been introduced against Belarus. In particular, against the National Bank of the Republic of Belarus, which is the government's paying agent," Kiyko said in a video commentary posted on the Finance Ministry's website.

"Last year the government and the central bank made a joint decision to make payments in Belarusian rubles due to this situation. The payments will be made to the investors, who can confirm they are holders of the Eurobonds. The relevant resources are available for it. We will handle this payment without any shocks," he said.

Belarus at the end of June 2017 placed $800 million of five-year bonds maturing in February 2023 at a yield of 7.125% and $600 million of ten-year bonds at a yield of 7.625%. The organizers of the deal were Citi and Raiffeisen Bank International, and the co-organizer without underwriting responsibilities was the Development Bank of Belarus.

Investors from the United States bought up 67% of the total, investors from the UK bought 24% and investors from continental Europe bought 9%, according to Finance Ministry data.

Both issues were placed in the 144A/Reg S format under English law and are listed on the Irish Stock Exchange. They are recorded by and settlements conducted via Euroclear, Clearstream and Depository Trust Company.

The Belarusian government and National Bank adopted a joint resolution earlier that allowed the Finance Ministry to make current payments on Eurobonds in Belarusian rubles, as well as restructure debt on Eurobonds on terms proposed to bondholders. "This procedure for fulfillment of obligations on Eurobonds is being used due to current sanctions restrictions, including against the National Bank as the financial agent of the government of the Republic of Belarus, as well as the ongoing inability of western infrastructure to ensure payments are conveyed to all Eurobond holders," the ministry said.

The Finance Ministry has made coupon payments on bonds in local currency since June 2022, saying that access to these funds had been provided for Citibank, which the Belarusian authorities continue to consider the payment agent, although on July 7 the bank said that it would no longer act as payment agent on Belarusian Eurobonds. The ministry said the payment agent has not sought to claim the funds.

The ministry said in early December that it had transferred payments on Eurobonds in Belarusian rubles to bondholders from Russia, Armenia and Belarus in line with their requests.

Belarus has five outstanding Eurobond issues totaling $3.25 billion. The country last entered the Eurobond market in June 2020, when it placed five-year bonds totaling $500 million at 6.125% and 10-year bonds totaling $750 million at 6.375%. U.S. residents made up more than 50% of the investors in the bonds.

S&P Global Ratings and Fitch Ratings downgraded the ratings of all Belarusian Eurobond issues to "D" (default), and the country's sovereign foreign currency credit ratings to "SD" (selective default) and "RD" (restricted default), respectively, after Belarus decided in late June to pay the coupons on U.S. dollar-denominated Eurobonds in Belarusian rubles.