Ukrainian Railway places five-year Eurobond at 8.25%

Railway operator Ukrainian Railway (RAILUA) completed
the placement of a five-year Eurobond for USD 500 mln, the company’s CEO Yevhen
Kravtsov reported on July 2. The coupon rate at the placement is 8.25%. The
company is going to use the bond’s proceeds primarily to repay bridge loans
from state banks and state institutions (UAH 5 bln, or about USD 190 mln,
maturing in August) and perform an amortization payment under the existing
Eurobond (USD 150 mln in September).

Alexander Paraschiy: The placement looks successful, as the rate is closer to lower end of
the range we expected (8% to 9%). Additionally, the bond’s spread to sovereign is
just 155 bps. With USD 500 mln raised by Ukrainian Railway, the company has no
more liquidity risk and is set to smoothly repay all its foreign currency
obligations due in 2019. We expect another quasi-sovereign issuer, Naftogaz
(NAFTO), to also complete a bond placement in the near future.