U.K. court grants Privatbank 42-day delay to respond to bondholders

11 December 2017

The London Court of International Arbitration extended the deadline for Privatbank to respond to the claims of its Eurobond holders to Jan. 17 from Dec. 6, the bank reported in a stock exchange announcement. Recall, a trustee of Privatbank’s senior Eurobonds (PRBANK) submitted on Nov. 8 requests for arbitration against the bail-in of the bonds. The bank’s senior and subordinated Eurobonds of USD 555 mln total outstanding were exchanged for the bank’s shares after the bank was recognized insolvent on Dec. 18, 2016. Later on, all of the bank’s shares were transferred to the ownership of Ukraine’s Finance Ministry.

 

Alexander Paraschiy: It is very unlikely that Privatbank and the Ukrainian government have not prepared to respond to the claims of bailed-in bondholders. Therefore, the request to extend the deadline for filing a response looks more like an attempt to postpone the ultimate court resolution on the issue. So far, we see a high chance for the bondholders to win the case against the bail-in, but the ultimate decision, including appeals, may take a couple of years. The only probable trump card in Ukraine’s hand is a possible resolution of the Bank of England that had supported the bail-in, as some government officials have hinted. However, it is not clear at the moment whether such a resolution (if it’s indeed in the Ukrainian government's favor) will really help Ukraine improve its position in the litigation.

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