Ukraine expects to settle restructuring of 13 eurobond series Nov. 12

By Angela McDaniels

Tacoma, Wash., Oct. 30 – Ukraine said the conditions to the restructuring of 13 series of sovereign and sovereign-guaranteed bonds have been satisfied, and the settlement date is expected to be Nov. 12.

As previously reported, Ukraine received approval to restructure the following bonds at bondholder meetings held Oct. 14 in London:

• $500 million 6 7/8% bonds due 2015;

• $1.5 billion 7Ύ% bonds due 2020.

• $1.25 billion 7½% bonds due 2023; and

• $700 million 6Ύ% bonds due 2017;

• $1 billion 6.58% bonds due 2016;

• $2.25 billion 7.8% bonds due 2022;

• $1.25 billion 6Ό% bonds due 2016;

• $2.6 billion 9Ό% bonds due 2017;

• $1.5 billion 7.95% bonds due 2021;

• €600 million 4.95% bonds due 2015;

• $550 million 9% guaranteed bonds due 2017;

• $690 million 7.4% guaranteed bonds due 2018; and

• $568 million 8 3/8% guaranteed bonds due 2017.

A meeting for a 14th series of bonds, Ukraine’s $3 billion 5% bonds due 2015, was adjourned for lack of a quorum, and a new meeting was scheduled for Oct. 29 in London.

The restructuring is being carried out via an exchange offer. Holders who exchange will receive new bonds and gross domestic product-linked securities in exchange for their existing bonds.

The total principal amount of new bonds and GDP-linked securities to be issued in the exchange offer will be announced prior to the settlement date.

The main features of the restructuring include the following:

• Exchanging bondholders will experience a 20% nominal haircut;

• The exchanged bonds will be rolled into nine new bonds, with principal payments rescheduled to fall outside of the 2015 to 2018 program period. Principal will instead be repaid in nine equal amounts from 2019 to 2027;

• All nine series will have a coupon of 7Ύ%, representing an increase of 50 basis points compared to the blended average under current contractual agreements; and

• The GDP-linked securities will provide potential upside to holders from 2021 to 2040. Specifically, the payment will be zero if real GDP growth is below 3%, 15% of the value of any GDP growth between 3% and 4% and 40% of the value of any GDP growth above 4%. Payments for years 2021 to 2025 will be capped at 1% of GDP for each year, and no payments will be made unless nominal GDP is higher than $125.4 billion.

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