Metinvest places new notes, ups tender offer amount

Metinvest (METINV), Ukraine’s largest steelmaker, placed
on Sept. 17 a total of USD 333 mln of new notes maturing on Oct. 1, 2027 at
98.429% of par, according to Bloomberg. The notes were priced at 7.95% yield to
maturity, bear a 7.65% coupon, and were issued to finance Metinvest’s purchase
of its 2021 and 2023 notes under tender offers announced on Sept. 15.

Metinvest amended its tender offers for its 2021 and
2023 notes by increasing the maximum acceptance amount to USD 320 mln from USD
290 mln previously, according to the holding’s Sept. 18 release to investors.
Metinvest continues to intend to keep the amount outstanding of its 2023 notes
above USD 300 mln after the tender, the release said.

Dmytro Khoroshun: We view
Metinvest’s placement of its 2027 notes as successful. We calculate that it
occurred at a 15-20 bps yield premium to Metinvest’s outstanding notes and at a
97 bps spread to Ukraine’s sovereign curve.

Both Metinvest’s 2023 and 2027 notes will likely be
included in the JPMorgan CEMBI Broad Diversified index because the amount
outstanding is greater than USD 300 mln for each note. However, Metinvest’s
2023 note will likely be excluded from JPMorgan’s narrower CEMBI Diversified
index because its amount outstanding will have dropped below USD 500 mln as a
result of the tender.

We maintain our neutral view on METINV bonds.