July 22, 2019 | Cbonds
How do you assess the results of the placement?
The placement showed a high assessment of the reliability and stability of the company by international investors. Demand for Eurobonds exceeded supply by 5 times and reached $ 2.5 billion. This allowed to achieve a low interest rate on the bonds of participation in the loan at 8.25% per annum, which is 1.5% lower than the previous issue of Eurobonds of the company, 0.75% lower than the same issue of the sovereign, which took place in October 2018, and is the lowest rate among quasi-sovereign borrowers from Ukraine since 2011.
Demand for paper exceeded $ 2.5 billion at the same time, the volume of issue amounted to 0.5 billion dollars. Why have you decided not to increase the amount of the loan?
There are 2 aspects. Firstly, an increase in the issue amount would require changes in the company's financial plan, which is approved by the Cabinet of Ministers of Ukraine. And this is a long process and given the clear schedule of accommodation it was not possible. Secondly, the company conducts a balanced credit policy and attracts financial resources based on the needs for the relevant period.
How many investors bought the securities? What is the geographical and institutional structure of the investors?
More than 175 investors from the UK, USA, continental Europe and Asia have applied for the purchase of the company's securities. Most investors were expected to be representatives of the UK and the EU.
What will the attracted resources be used for?
The funds raised will primarily be used to repay short-term bridge financing from Oshchadbank and Finnpro, the implementation of a regular payment on Eurobonds 2013, as well as to Finance other needs of the financial and economic activities.
Not so long ago, Ukraine placed international bonds in Euro - 7-year securities were sold with a yield of 6.75% per annum, and after placing their yield on the secondary market fell below 6%. Have you considered the possibility of repeating the sovereign's success and placing the securities in euros?
As of June this year, the capacity of the European market in dollars, in our opinion, was slightly more than in euros, at the same time, our prepared documentation of the transaction provided for financing in US dollars. Thus, taking into account all factors, the currency of financing was the US dollar.
How can the placement of Eurobonds affect the rating of JSC “Ukrainian Railways”, because now the rating of JSC “Ukrainian Railways”from Standard&Poor's (CCC +) is slightly lower than the sovereign (B-), although the ratings from Fitch were identical (B-)?
The placement of Eurobonds will allow the company to repay the short-term part of the loan portfolio, which certainly has a positive impact on the indicators that are estimated by rating agencies. The level of liquidity of JSC “Ukrainian Railways” after the transaction, together with the positive changes in the company in recent years give every reason to improve the credit rating of the company.
|Status||Country of risk||Maturity (option)||Amount||Issue ratings (M/S&P/F)|
Company: Ukrainian Railway
|Full company name||Ukrainian Railways|
|Country of risk||Ukraine|
|Country of registration||Ukraine|