ULF announces it won’t pay March coupon on time

Ukraine’s leading agricultural holding Ukrlandfarming (ULF, UKRLAN) announced on March 21 that it is requesting bondholders to restructure its interest payments under its Eurobond due March 27. “The March 2017 interest payment will not be paid on March 27,” the announcement said.

Instead, Ukrlandfarming will use a 30-day grace period to agree on a coupon restructuring. The holding and its subsidiary Avangardco (AVINPU, AVGR LI) are in discussions with an ad hoc committee of bondholders on that issue, according to the release. ULF stated that the committee represents holders of about 40% of ULF notes and 50% of Avangardco notes.

Recall, some ULF bondholders have initiated a conference call for March 21 with other holders to discuss, among other issues, the possible failure of ULF to pay its coupon.

Alexander Paraschiy: It seems like ULF is sure about its ability to agree on a coupon restructuring with key bondholders, so it is ignoring psychological pressure that might have been created by the March 21 call. We remain bearish on ULF bonds, as well as the bonds of related Avangardco. In our view, the latter is likely to pay its cash coupon in late April, as was agreed upon last year (50% of accrued amount).