Metinvest pays only compulsory part of new Eurobonds coupon

Ukraine’s largest steel producer Metinvest (METINV) paid USD 5.2 mln in its debut cash coupon on its newly issued notes on May 18. With this, the holding paid only the minimum possible part of the quarterly cash coupon (based on the rate of 2.793% p.a.). Metinvest capitalized a part of the coupon (USD 15.253 mln, or 6.58% p.a.) by issuing PIK Notes. The minimum payment was explained by the low level of its average cash balance (below USD 180 mln), which was USD 108 mln for the period from March 22 to 30 April. With new PIK notes, the total principal amount of Metinvest Eurobonds increases by 1.02% to USD 1209.5 mln.

Andriy Perederey: The coupon payment was lower than we expected, but we understand the logic of a low payment this time – the holding has lost some of its assets on the occupied part of Donbas and for that reason faces interim bottlenecks in its production-supply chain. We expect Metinvest will resolve all the issues and start paying higher coupons in half a year. That said, we are keeping our positive view on Metinvest bonds, which are now trading at 94-95% of par.   

Now we will see another fixed income instrument from Metinvest – the PIK notes, which may be repaid in full as soon as in one quarter, or kept until the main bonds’ maturity. So far, we believe, the holding will try to repay them later this year.