Kyiv city completes restructuring for Eurobond holdouts

The City of Kyiv (CITKIE) completed on Sept. 4 the
exchange of its remaining USD 101.15 mln in Eurobonds maturing in Nov. 2015 for
new notes with a 7.5% coupon maturing on Dec. 15, 2022, the city reported on
Sept. 7. The new Eurobonds will be issued for USD 115.07 mln, according to the
finance.liga.net news site.

Recall, the holders of USD 148.8 mln of CITKIE’15
notes voted to exchange them into 117.4 mln Ukrainian government Eurobonds
(50/50 maturing in Sept. 2019 and Sept. 2020, respectively) as well as USD 36.9
mln in Ukraine’s GDP warrants. The exchange took place in December 2015.
Those who failed to vote in favor of the exchange retained their 2015 notes.
Ukraine’s parliament allowed the Kyiv city government to avoid any payment on
the remaining notes until a restructuring deal is reached.

Alexander Paraschiy: The holdouts – who exchanged their old CITKIE’15 notes for these new
ones – seem to be slightly worse off than those who exchanged their notes in
December 2015. For each USD 100 in old notes, the holdouts received USD 114 in
new notes for a market value of about USD 105 mln (assuming market YTM of the
new notes of 10%). Those who exchanged their notes in 2015, per USD 100 of old
CITKIE notes, got state bonds priced currently at USD 92, as well as USD 18 in
cash coupons in 2016-2018. Such treatment is definitely fair, and we consider
the deal as a positive development for both the city and its holdout
bondholders.