City of Kyiv to restructure bonds

Обзор облигаций 05.03.2015 The City of Kyiv council adopted a revision of the city's budget to restructure debt, including loans and external borrowings. The City of Kiev was granted an exception to the State budget code regarding allocations to the general budget versus special funds. That being known, US$550m in Eurobonds issued in 2005 and 2011 could be restructured without special approval from Parliament. Investment implications: The restructuring of local loans received in 2012 are an exception to the rules of general funds which was granted by Parliament under special rights. While restructuring external debt, does not require any parliamentary approval, the City might need permission from the Ministry of Finance. Under the current situation, in consideration of the announced restructuring of sovereign debt, although this approval is unlikely to be challenged, it could require at least one month for the City to submit the necessary documents to attain MoF approval. Conditions of the restructuring could be discussed after the MoF and investors agree to the terms of the sovereign debt restructuring. Conditions could be more attractive, as the lower volume of debt could permit shorter maturities at a higher coupon rate but with a principal haircut similar to the sovereign debt.