Metinvest might continue buying back its Eurobonds

Ukraine’s largest steelmaker Metinvest (METINV) might
continue buying back its Eurobonds after it analyses the results of its tender
for METINV’23 notes, according to the holding’s CEO Yuriy Ryzhenkov as cited by
Interfax-Ukraine.

 

Metinvest might decide to lower its debt load via the
buybacks in order to secure better financing conditions for its future
borrowings, Ryzhenkov said at a press conference on the occasion of Metinvest’s
15 year anniversary. Metinvest plans to continue the practice of attracting
CapEx-related financing that might have interest rates lower than 4% for 7-10
year loans, Interfax-Ukraine reported citing Ryzhenkov.

 

Recall, on June 17 Metinvest launched a tender
to buy back up to USD 150 mln (the company has the right to change this amount)
of its METINV’23 notes (USD 311 mln outstanding). The tender results might be
announced on June 25.

 

Metinvest might also consider investing, during the
next 10 years, at least USD 3-3.5 bln into a Ukraine-based direct reduction
iron and electric arc furnace complex with the capacity of 4-4.5 mmt steel per
year, Ryzhenkov said.

 

Metinvest is also considering constructing, in
partnership with Danieli, a rolling mill in Italy, but no final decision has
been made, according to Ryzhenkov.

 

Recall, on June 10 Metinvest announced signing a contract
with Danieli to invest over USD 1 bln into a cold-rolled facility in Ukraine.

 

Dmytro Khoroshun: Metinvest
might pay at least up to USD 500 mln in dividends in 2021, we continue to
expect.

 

Paying substantial dividends while its profitability
is high, in addition to buying back some of its notes outstanding, will
position Metinvest for focusing on capital investments in the coming years.

 

The possible note buybacks should also lower the rates
the bond markets will demand from Metinvest for its future issuances.

 

We maintain our neutral view on METINV bonds.