Metinvest prices two new note tranches

Metinvest (METINV), Ukraine’s largest steelmaker,
priced on Oct. 1 two tranches of its new Eurobonds the holding is likely to
issue to finance its buyback of up to USD 440 mln of outstanding METINV’23
notes, according to a Bloomberg report on the same day.

The yield to maturity (YTM) of the USD 500 mln tranche
maturing on Oct. 17, 2029 (10-year tenor) was 7.95% (coupon 7.75%, re-offer
price 98.629% of nominal). The YTM for the EUR 300 mln tranche maturing June
17, 2025 (a tenor of 5.7 years) was 5.75% (coupon 5.625%, re-offer price
99.411%).

Metinvest’s tender offer for the buyback of its
METINV’23 notes will expire at 11.59pm New York
City time on Oct. 15, and the settlement for the deal is expected on Oct. 17.
The deal’s completion is contingent upon Metinvest placing its new notes on
satisfactory terms, as determined in Metinvest’s sole discretion.

Dmytro Khoroshun: The pricing
of Metnvest’s new notes looks successful for the company. We calculate that the
new METINV’29 USD-denominated note was priced with a 60 bps spread to Ukraine’s
sovereign USD curve. This is only 13 bps higher than the 47 bps spread at which
the holding’s METINV’26 note closed on Oct. 1. The EUR-denominated METINV’25
note was priced with a 75 bps to Ukraine’s sovereign, we estimate.

This pricing will likely prove acceptable to the
holding, and the deal has solid chances of being completed.

At today’s EUR/USD exchange rate of 1.09, Metinvest
will collect about USD 819 mln gross in cash from the issuance of these two
notes, or about USD 320-340 mln net after purchasing USD 440 mln of METINV’23
notes at 106% of nominal and all the fees, we calculate.

We maintain our bullish view on METINV bonds.