Privatbank reportedly close to restructure Sept. 23 Eurobonds

Обзор облигаций 27.08.2015 The creditors committee of Privatbank’s (PRBANK) 2015 notes (USD 200 mln due Sept. 23) is going to support the bank’s recent restructuring offer, a representative of the committee leader, Callaway Capital, told Reuters on Aug. 26. The committee members hold around 25% of the bank’s 2015 notes and they declined to accept the bank’s previous restructuring offer, which was made public on July 29. Last week, the bank had to submit a new restructuring proposal that links the bond’s maturity date to the success of restructuring Privatbank’s other debt, namely USD 150 mln in subordinated Eurobonds that mature in February 2016. According to the amended offer for Privatbank’s September notes, the bank is going to fully repay them on Jan. 15, 2016 if it does not reach a restructuring deal with the holders of its Feb.’16 notes by Jan. 5. If the restructuring deal on the Feb.’16 notes is reached by the Jan. 5 deadline, the maturity of its September 2015 notes will be extended to Jan. 23, 2018. In such a case, the bank will repay 20% of its principal on Aug. 23, 2016 and Feb. 23, 2017, and then 15% of the principal on May 23, Aug. 23, and Nov. 23 of 2017 and the remainder 15% on the maturity date. In both cases, the bank is offering a 10.25% coupon rate on its September notes (compared to the current 9.375%) and a 2% consent fee for those accepting the new restructuring offer by 4 p.m. London time on Sept. 2, 2015. The bondholder meeting to approve the new deal is scheduled for Sept. 7. Alexander Paraschiy: At the current price of 68.5% of par, Privatbank’s September notes look like a real bargain as they yield (1) over 630% to their initial maturity, (2) about 210% to their possible maturity on Jan. 15, 2016 (if the latest restructuring offer is approved, but the bank fails to agree on restructuring its Feb.’16 notes) and (3) 42% to their possible maturity on Jan. 23, 2018 (if the restructuring of both notes goes smoothly). That’s a real victory for the bondholders committee, which proved their effectiveness in bargaining for good restructuring conditions. The key question now is whether the creditors further intensify their pressure on Ukraine’s biggest lender. In particular, under the recently proposed restructuring parameters, the holders of Sept.’15 notes have large temptation to realize scenario #2, as described above, i.e. to prevent a successful restructuring of the bank’s Feb.’16 notes by the Jan. 5 deadline and trigger the repayment of USD 200 mln notes on Jan. 15.