Ukreximbank tenders USD 300 mln of its 2025, 2022 notes

Ukraine’s State Export-Import Bank (Ukreximbank,
EXIMUK) offered on Oct. 26 to purchase part of its notes due in January 2025
and April 2022 for up to USD 300 mln. The bank is offering to purchase up to
USD 200 mln of its 2025 notes (of the USD 600 mln total amount outstanding) at
101.5% of par and up to USD 100 mln of the 2022 notes (of the USD 188 mln total
as of Oct. 27) at 100.75% of par. The bank said it will prioritize the purchase
of the 2025 notes. It is offering a 3% of par early tender premium for each
bond for those agreeing to sell their notes before the early tender deadline of
Nov. 6. The ultimate deadline for the tender is Nov. 23.

The bank stated that the purpose of the debt operation
is the optimization of its liability portfolio and the reduction of its total
cost of debt. As of Sept. 1, the bank has foreign currency cash of USD 22 mln
and foreign currency deposits in other banks in the equivalent of USD 1.14 bln.
Its foreign currency debt amounted to the equivalent of USD 1.75 bln.

The bank’s 2025 notes will amortize by USD 300 mln in
January 2021 and then semi-annually by USD 37.5 mln between July 2021 and
January 2025. The bank’s 2022 notes should have been already amortized by 75%
(from USD 750 mln), with the remaining semi-annual USD 62.5 mln amortization
payments in April 2021 – April 2022. Therefore, in case the bank is able to
purchase all the USD 300 mln notes in November, it will reduce the bonds’
amortization amounts by USD 179 mln in 2021, by USD 58 mln in 2022, by USD 25
mln in 2023-2024 and by USD 13 mln in 2025. 

Alexander
Paraschiy: There is indeed little purpose for the bank to pay
over 9% interest on its Eurobonds while its dollar deposit rates are below 2%.
At the same time, we see few reasons for the holders of EXIMUK bonds to offer
them to the issuer, with limited reinvesting alternatives at such yields.