Alfa Bank Ukraine 2010 Eurobond holders approve swap
24 July 2009
The holders of Alfa Bank Ukraine 2010 Eurobonds, at a meeting yesterday, approved swapping the two issues for a new one maturing 2012. Alfa Bank Ukraine will pay 15% of the face value of the 2010 notes and exchange the remaining portion for principal in new notes, expiring in 2012. The new Eurobonds will be issued through Ukraine Issuance on July 30, 2009. They will be repaid in equal parts beginning in the second year of circulation and have a quarterly coupon. Andriy Gostik: The news is precisely as we expected (see our flash note from July 22). Last week, Alfa Bank Ukraine carried out a similar swap for its 2011 notes. Alfa’s equity-to-assets of 9.7% is below the mean of 13.4% for the system. The bank also faces liquidity problems: its current ratio is at 68.7% vs. the average of 73.9%. Alfa’s credit risk ratio of 371.8% is about twice larger than Ukraine’s average of 189.0%. In our view, based on this and taking into account the issuer’s inherent risks, a fair YTM for the 2012 notes should be around 40%, corresponding a price of ~68. We recommend buying into Alfa’s new Eurobonds below this level.
