EBRD buys USD 100 mln tap issue of Ukrainian Railways 2024 Eurobonds

Ukrainian Railways (RAILUA) and the EBRD signed on
Sept. 10 a deal based on which the bank will purchase about USD 100 mln of additional
Eurobonds of the company maturing in 2024, Ukraine’s Infrastructure Ministry
reported. The effective rate of the additional bond placement is 7.292%, the
ministry said. EBRD confirmed this on Sept. 11, stating that the raised funds
will be used for the rehabilitation of priority railway lines. About 70% of
the  funds raised will be used for modernizing the Trans-European
Transport Networks, and the rest will be used for rehabilitating the company’s
communication and dispatching infrastructure, the ministry said.

Ukrainian Railways CEO Yevhen Kravtsov added on his
Facebook blog that the company will use EBRD money for the purchase of raw
materials exclusively, and the procurements would be convened “on EBRD rules.”

Recall, in early July, Ukrainian Railways issued new USD 500 mln Eurobonds maturing in 2024
with a coupon rate of 8.25%. Based on the company’s financial plan for 2019, it
expected to attract two loan tranches from EBRD for a total amount of USD 117
mln this year.

Alexander Paraschiy: New EBRD
financing is a positive signal indicating that a respected lender is satisfied
with what is going on in the company. The expected increase of total amount of
the RAILUA’24 Eurobond issue from USD 500 mln to about USD 600 mln is unlikely
to improve the bond’s liquidity. We maintain our neutral view on the bond.