Bank Nadra Eurobonds may change due to recapitalization delays

Bank Nadra Eurobonds may change due to recapitalization delays
Yesterday Bank Nadra requested holders of its USD 75 mln bonds, maturing in 2017, to amend the “Events of Default” clause. Specifically, the bank asked to complete its recapitalization by 31 December 2010 rather than 30 September 2010, giving it time to comply with all statutory requirements by 31 March 2011 instead of 31 December 2010. The bond holders meeting is scheduled for October 26, while investors who agree with the amendments by October 22 will be eligible for a consent fee of 0.2% of the principal amount. The decision has to be approved by no less than ¾ of votes cast (minimum quorum required is holders of no less than 2/3 of principal outstanding). Mykyta Mykhaylychenko: We expect the decision to be approved. The suggested provision to complete Nadra’s recapitalization by end-2010 is in line with the IMF stand-by agreement requirement and we expect it to be fulfilled. Earlier in June, the bonds were restructured with a 47.1% haircut, 7-year prolongation (with a sinkability provision attached), and coupon reduction to 8% p.a. from 9.25% p.a. The market has not reacted significantly to the request and the notes are now traded at 18.1% s.a. YTM (duration is 3 years).