Metinvest to pay USD 6.5 mln in Eurobond interest on Dec. 18

Обзор облигаций 12.12.2017 Ukraine’s leading steel holding Metinvest (METINV) reported on Dec. 11 that it will allocate USD 9.7 mln in an early repayment amount on Dec. 18, of which the only disbursement to the noteholders would be the USD 6.5 mln of Pay-If-You-Can (PIYC) interest for the period of Nov. 18 - Dec. 17. Dmytro Khoroshun: We see little difference between Metinvest making this voluntary PIYC interest payment on Dec. 18, rather than the next interest payment date of Feb. 18, 2018. The possible reason for the holding making early payment is increasing its flexibility in reaching end-of-quarter KPIs related to some of the conditions of the recent restructuring. However, in particular, we think that this repayment will not allow Metinvest to increase its 2018 permitted CapEx level, USD 651 mln, by an additional USD 100 mln, because on May 18 and Aug. 18 Metinvest did not conform to some of the necessary conditions of permitted CapEx level increase. Namely, on these two interest payment dates, the holding did not pay in full and in cash the PIYC interest (instead capitalizing it partly by issuing PIK notes) and did not pay any catch-up interest. We are keeping our neutral view on METINV Eurobonds.