Bondholders of Ukraine’s second-largest bank voted in favor of changing terms on $1.5 billion of debt, completing the first reprofiling in Ukraine’s debt overhaul.
Creditors of the State Export-Import Bank of Ukraine, known as Ukreximbank, agreed to push back maturity dates by seven years and raise interest on notes due in 2015, 2016 and 2018, the lender said in a statement on its website. At least 79 percent of bondholders who cast ballots in each of the three maturities voted in favor of the new terms.
The state-run bank hasn’t suffered from the same stumbling blocks with creditors as the government because it’s not asking them to accept a writedown on principal, a condition Ukraine is seeking in its $19 billion sovereign restructuring. The eastern European nation wants debt relief after a 16-month conflict with pro-Russian separatists drained reserves and deepened an economic slump.
“Ukrexim offered great terms and investors grabbed the opportunity,” Vitaliy Sivach, a Kiev-based bond trader at Investment Capital Ukraine, said by e-mail. “This won’t have any implications for the sovereign because Ukrexim is crucial for the economy and the government was trying to do everything needed to avoid outright default.”
Ukreximbank is one of three state-owned companies that the government agreed would be subject to easier restructuring terms due to their role in the economy. One of the others, state-owned AT Oschadbank, is asking bondholders this month to support modifying terms on its bonds.
Ukreximbank’s $750 million of securities due on July 27 were little changed at 78.44 cents on the dollar by 7:32 p.m. in Kiev after climbing to a six-month high on Monday. They traded at a premium of 25 cents above sovereign notes maturing on Sept. 23.
The vote outcome came as officials from Ukraine’s finance ministry meet this week with creditors led by Franklin Templeton to discuss the sovereign reprofiling after months of disagreements over the necessity of principal cuts.
Bondholders in Ukreximbank’s securities agreed in April to grant the trade bank a three-month extension on its bonds to avoid defaulting. The lender needed at least two thirds of bondholders to participate in the July 3 vote on the terms, and 75 percent of those must have voted yes for terms to pass.
The Ukrexim deal shows “Ukraine’s commitment and capability to finding in good faith mutually acceptable terms with creditors,” the finance ministry said in an e-mailed statement.