25 May 2008
Ukrzaliznytsya, Ukraine’s state railway operator, announced plans to spurn its reliance on state credits by turning toward external debt markets, the first Eurobond issue for USD 100-200 mln is expected by the end of the year. Following in Naftogaz Ukrainy’s footsteps, Ukrzaliznytsya will become the second state giant to place Eurobonds. Ukrzaliznytsya unites six Ukrainian railways; in 2006 the company had sales of USD 4.4 bln and net income of USD 140 mln. Oleksandr Klymchuk: We expect the debut issue to have five year maturity with a yield in 7.5-8.3% range. In the mid-term Ukrzaliznytsya’s executives plan to make the company an active external borrower with a series of Eurobonds and syndicated loans to follow. The state-owned monopoly has to implement a USD 3 bln investment program over the next two years to modernize infrastructure and prepare Ukraine’s railways for Euro-2012. The company has already attracted credits from Barclays and Raiffiessen Bank Aval (BAVL: HOLD) totaling USD 400 mln.