27 Feb 2024 16:05

National Bank has final say in allowing companies to make Eurobond payments - Kiev

MOSCOW. Feb 27 (Interfax) - The National Bank of Ukraine has the final say in selling foreign currency to big domestic companies and holdings and allowing them to pay Eurobond holders and Western creditors from Ukraine, Ukrainian First Deputy Prime Minister, Economy Minister Yulia Sviridenko said at the Made in Ukraine forum in Kiev.

"We have acted in strict compliance with the law. Respective amendments were made by which the government needs to apply to the National Bank of Ukraine. We have registered an application and have submitted it to the National Bank, which has the final say in allowing or banning respective forex operations," Ukrainian media quoted Sviridenko as saying.

As reported, the Ukrainian government adopted resolutions on February 6 and 13 to approve applications to the National Bank requesting that VF Ukraine, DTEK, Metinvest, Interpipe and Kernel be allowed paying Eurobond holders and other foreign creditors from Ukraine. The attached documents noted, in particular, that such decisions would help maintain investor confidence, save foreign currency for the companies, many of which are major exporters, and ensure their more efficient and stable operation in the future. Agency experts estimate the total sum mentioned in the applications at over $1.8 billion.

Meanwhile, head of the IMF mission to Ukraine Gavin Gray sent a letter to the Ukrainian authorities, which said he doubled the individual approach's compliance with the strategy for liberalization of forex restrictions approved by the National Bank last summer in fulfillment of obligations under the Extended Fund Facility (EFF). The IMF is also concerned about the rather significant amount of possible payments and the possible impact of such decisions on Ukraine's upcoming negotiations on the restructuring of sovereign Eurobonds with commercial creditors. The National Bank of Ukraine has so far refrained from comment.

Head of the pro-presidential Servant of the People faction David Arakhamia supported the government application, referring to the purchase of an MTS business in Ukraine by an Azerbaijani investor (VF Ukraine) in 2019 as an example.

"They made the best placement of Eurobonds, which everyone boasted about. They have not been able to pay on these bonds, neither the principal nor the interest, for two years despite having these funds in their accounts. The question is: will someone invest if they cannot manage their money?" Arakhamia said on a social network

Natalia Yemchenko, communications director of Ukraine's largest private holding SCM, said that DTEK cannot service "green" Eurobonds, since all its income is in hryvnia, which creates the risk of a default.

"State-owned companies have the right to buy foreign currency to service their foreign obligations, while private businesses do not. That is, private businesses are simply discriminated against in the ability to draw funds and service earlier borrowings. All that is needed is to equalize the rights of state-owned companies and private ones in attracting investments," Yemchenko said on a social network.

As reported, companies with sizable foreign-currency revenue, which they have to bring back to Ukraine, are also experiencing problems with servicing their external obligations under the current restrictions from the National Bank.