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Concorde Capital Research: VAB Bank blames ForEx regulation in missed coupon, to pay by mid-October

October 03, 2014 | Cbonds

Ukraine’s 15th biggest bank by total assets, VAB Bank (VABANK), failed to pay its quarterly coupon on its USD 88 mln Eurobond as it was not able to purchase enough foreign currency for this payment due to toughened ForEx regulations in Ukraine, numerous media reported on Oct. 2, citing phone interview with the bank CEO Denis Maltsev. The payment of about USD 2.0 mln was due on Sept. 14. “Our ability to purchase foreign currency is limited due to new limitations on foreign currency transactions,” said the bank’s CEO, as cited by Interfax. The bank is planning to accumulate enough foreign currency to repay the coupon “in week or two,” said Maltsev, as cited by Bloomberg.

Alexander Paraschiy: Foreign currency regulations indeed have become unusually tough over the last month. At the same time, no single regulation prevented the bank from explaining this to its bondholders three weeks ago, when the coupon was due. Moreover, it’s unclear why a bank with total end-1H14 assets equivalent to USD 2.0 bln (of which USD 0.5 bln is denominated in foreign currency) should spend three-to-five weeks accumulating USD 0.002 bln for servicing its external obligations.

All these uncertainties cannot but influence the other assets of majority the bank’s shareholder Oleh Bakhmatyuk like Ukrlandfarming (UKRLAN) and Avangardco (AVGR LI, AVINPU). He controls about 90.0% of the stake in VAB Bank after a recent capital increase.

Issue: VAB Bank, 10.125% 14jun2019, USD

StatusDefaultCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
redemption defaultYesUkraine06/14/2019112,500,000 USDWithdrawn/-/Withdrawn

Company: VAB Bank

Full company namePJSC VAB Bank
Country of riskUkraine


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