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Concorde Capital Research: Metinvest prices two new note tranches

October 02, 2019 | Cbonds

Metinvest (METINV), Ukraine’s largest steelmaker, priced on Oct. 1 two tranches of its new Eurobonds the holding is likely to issue to finance its buyback of up to USD 440 mln of outstanding METINV’23 notes, according to a Bloomberg report on the same day.

The yield to maturity (YTM) of the USD 500 mln tranche maturing on Oct. 17, 2029 (10-year tenor) was 7.95% (coupon 7.75%, re-offer price 98.629% of nominal). The YTM for the EUR 300 mln tranche maturing June 17, 2025 (a tenor of 5.7 years) was 5.75% (coupon 5.625%, re-offer price 99.411%).

Metinvest’s tender offer for the buyback of its METINV’23 notes will expire at 11.59pm New York City time on Oct. 15, and the settlement for the deal is expected on Oct. 17. The deal’s completion is contingent upon Metinvest placing its new notes on satisfactory terms, as determined in Metinvest’s sole discretion.

Dmytro Khoroshun: The pricing of Metnvest’s new notes looks successful for the company. We calculate that the new METINV’29 USD-denominated note was priced with a 60 bps spread to Ukraine’s sovereign USD curve. This is only 13 bps higher than the 47 bps spread at which the holding’s METINV’26 note closed on Oct. 1. The EUR-denominated METINV’25 note was priced with a 75 bps to Ukraine’s sovereign, we estimate.

This pricing will likely prove acceptable to the holding, and the deal has solid chances of being completed.

At today’s EUR/USD exchange rate of 1.09, Metinvest will collect about USD 819 mln gross in cash from the issuance of these two notes, or about USD 320-340 mln net after purchasing USD 440 mln of METINV’23 notes at 106% of nominal and all the fees, we calculate.

We maintain our bullish view on METINV bonds.

Issue: Metinvest, 5.625% 17jun2025, EUR

StatusCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
outstandingUkraine06/17/2025300,000,000 EUR-/B/-

Company: Metinvest

Full company nameMetinvest B.V.
Country of riskUkraine
Country of registrationNetherlands
IndustryFerrous metals


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