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235 Goverment finance

Ukrainian Railway confirms intention to issue new Eurobond

Ukrainian Railway (RAILUA) has the potential to increase its debt by USD 1 bln, indicating a possible Eurobond issue

With the company’s gross debt of UAH 34.2 bln as of August 2018, its net debt-to-EBITDA ratio was at 1.5x, Kravtsov said. The company has a leverage covenant of 3.0x, based on its agreements with the EBRD and EIB. “That means that with EBITDA at the current level, we are capable of increasing our debt level by UAH 25 to 30 bln,” he said.

He also confirmed that Ukrainian Railway is now considering a Eurobond issue, on which he can further comment as soon as the government publishes a respective resolution (on its parameters). Kravtsov also highlighted that it’s important for investors to have a clear understanding on how the borrowing will be serviced. Taking this into account, Ukrainian Railway has proposed a mechanism of automatic adjustment of freight railway rates based on Ukraine's producer price index.

Recall last week, the Ukrainian media reported the Cabinet approved on Feb. 13 a resolution allowing Ukrainian Railway to issue a new Eurobond. At the same time, Ukrainian Railway commented that the exact parameters of that issue (including interest rate) have yet to be confirmed.

Recall, Ukrainian Railway’s existing USD 500 mln Eurobond will be amortized by USD 150 mln both in March and September 2019 and then by USD 50 mln semi-annually between March 2020 and September 2021.

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