Metinvest pays 4.68% in cash coupon, up from minimum 2.79% rate

Ukraine’s largest steel producer Metinvest (METINV)
paid USD 14.1 mln in a quarterly coupon on its Eurobond on August 18, implying
a 4.68% annualized coupon rate. The payment included the minimum cash payment
of USD 8.4 mln (2.79% p.a.) and a part 6.58% p.a. PIYC (pay-if-you-can)
interest. Metinvest capitalized on the rest of the PIYC interest by issuing USD
14.2 mln in PIK (pay-in-kind) notes. Metinvest’s average cash balance was USD
188.8 mln for the period from May 1 to July 31. With the new PIK notes, the
total principal amount of Metinvest Eurobonds increases by 1.2% to USD 1,223.7
mln.

Andriy Perederey: The coupon payment was higher than we expected as we saw only the
minimum cash amount being paid in August, but an increase in cash payments in November.
Metinvest’s stable production amid climbing global steel prices (advancing
17.2% to USD 516/t on average in mid-August from mid-May) allows us to expect
that the November coupon payment will be much higher: we see Metinvest will pay
the PIYC coupon in full and will partially redeem the earlier accumulated PIK
notes. We remain bullish on Metinvest bonds.