MHP repays its 2015 Eurobond

Ukraine’s leading poultry producer MHP (MHPSA, MHPC LI) has fully repaid its USD 234 mln senior notes, according to the company report of April 29, the notes’ maturity day. The company used financing from IFC (USD 175 mln) and ING (USD 25 mln) as well as its own cash to make the repayment. The deal enabled them “to prove to stakeholders that MHP is a long-term reliable partner, who always meets its obligations despite the challenging time in Ukraine”, according to comment of Yuriy Kosyuk, MHP CEO. 

Alexander Paraschiy: Despite the fact that the repayment of MHP’s 2015 bond was a base-case scenario for most of analysts, the news is very encouraging. In the current circumstances, Kosyuk’s comment is not just pathetic words: MHP is very likely to be the only Ukrainian issuer of international bonds that will repay them in 2015. The company has won an image of one of the most reliable borrowers in Ukrainian universe, and its bond yield curve turned to be a national benchmark, instead of sovereign curve.

That said, we now have to focus our coverage efforts on MHP’s other Eurobond, maturing in 2020. Its amount outstanding, USD 750 mln (or 1.4 times EBITDA 2014), gives little chance that the company will be able to repay from its own funds. The most straightforward way to refinance it, given the company’s experience, would be the issue of a new bond ahead of the existing bond’s maturity.