Ukrainian Railway pays USD 150 mln amortization on Eurobond

Ukrainian Railway (RAILUA) reported on March 14 it has
paid on time a USD 150 mln first amortization payment on its USD 500 mln
Eurobond, along with scheduled coupons. The company reported that the payment
was made “with the support of Ukraine’s Cabinet of Ministers.” Namely, the
company attracted refinancing (in both dollars and hryvnia) from state
Oschadbank (OSCHAD) and the State Agency for Support of Infrastructure
Projects.

The company’s existing Eurobond was issued in February
2016 to replace another bond as part of the company’s debt restructuring
operation. The bond amortizes by USD 150 mln on March 15 and September 15,
2019, and then semi-annually by USD 50 mln until September 2021.

Alexander Paraschiy: The timely
payment is an expected event, but the company having to seek refinancing from
various government-controlled entities does not inspire confidence. On the one
hand, it illustrates the government’s wish to remain solvent on all
quasi-sovereign bonds. On the other hand, it illustrates a lack of liquidity
inside the railway operator.

The company still has a chance to replenish liquidity
with a new placement of public or private international debt before the next
large repayment in September (USD 167 mln, including amortization and coupon).
Also, the company might accumulate its own resources, if the government agrees
to further increase cargo rates. If it doesn’t succeed, it will likely rely
again on state support for securing the next payment. That said, we remain
confident that in half a year, the government will remain committed to
servicing all its international debt.