Holders of Privatbank senior notes demand accelerated repayment

Madison Pacific Trust, a new trustee of the senior Eurobonds of Privatbank (PRBANK), issued an acceleration notice to the bank on Nov. 2, according to its exchange report on Nov. 6. In that way, the bondholders are demanding that Privatbank repay early two Eurobonds of USD 335 mln outstanding, originally maturing in January and February 2018.
 
Recall, all the Eurobonds of Privatbank were bailed induring the bank’s nationalization in late December 2016. The holders of Privatbank’s 2018 notes voted to change their trusteeon June 21, and the new trustee was officially appointedon Oct. 3.
 
Alexander Paraschiy: There is no way for the bank to repay the notes ahead of schedule or on schedule, as currently the bank has no obligations to any bondholders on its balance sheet. Therefore, acceleration of the notes is just an initial stage of international court litigation of the holders of senior notes against the bail-in. Despite the disappointing pace of the bondholders and their trustee, taking more than ten months for them to accelerate the bonds, we see high chances for the bondholders to succeed in international litigation against the bail-in.
 
There is much less clarity about the prospects of Privatbank’s USD 220 mln subordinated bonds due in 2021: their trustee has not filed any acceleration request and there is no sign that it is preparing to do that. As of now, it looks like the holders of subordinated notes will only initiate international litigation against the bank in 2021. And they have less likelihood for success.