The holding raised $750 million through Eurobonds

The largest mining and metallurgical holding in Ukraine, the Metinvest group, placed Eurobonds for the largest amount among Ukrainian companies. She managed to raise $750 million for a period of seven years. According to experts, now is a good time for Ukrainian companies to issue Eurobonds. But issuers should drown themselves - the global market situation is expected to worsen in the second half of the year.

Metinvest BV, the holding company of the Metinvest group, has placed seven-year Eurobonds in the amount of $750 million, one of the organizers of the paper issue, VTB Capital, said yesterday. The coupon rate on Eurobonds was 8.75% per annum, the yield was 9%. According to VTB, the securities were sold to more than 200 investors, and demand for them was three times higher than supply. Initially, the bond yield was set in the range of 9-9.25%. The placement of the new Eurobond issue is scheduled for January 14 on the Irish Stock Exchange.

The placement of Metinvest's Eurobonds has become the largest and longest-term transaction in the corporate sector of Ukraine, noted Andrey Solovyov, head of debt capital markets at VTB Capital. The holding plans to use the funds received to finance capital investments. Over the next five years, Metinvest intends to invest $8 billion in modernization and re-equipment, which implies an annual investment of $1.2-1.3 billion.

Metinvest is the largest mining and metallurgical holding in Ukraine. According to the company, for the nine months of 2010 its revenue amounted to $6.83 billion, EBITDA - $1.94 billion, net profit - $873 million. As of September 30 last year, total debt amounted to $2.52 billion. Metinvest shareholders are the SCM group (75%) of Rinat Akhmetov, as well as Smart Holding (25%) of Vadim Novinsky and Andrey Klyamko.

“Now is a good time for Ukrainian companies to issue Eurobonds, and the placement of Metinvest, as well as the recent issue of Eurobonds by Ukreximbank, clearly demonstrated this,” says Alfa Bank analyst Evgenia Afonina. At the end of January, Ukreximbank placed securities for UAH 2.39 billion (equivalent to $300 million) at 11% per annum. This is the first time that Eurobonds of an issuer from Ukraine were placed on the foreign market in national currency. “Potential investors in Ukrainian securities now have a good supply of liquidity, which may not be maintained,” notes Ms. Afonina. “The cost of raising funds has decreased significantly compared to 2010: if in April 2010 Metinvest placed Eurobonds for $500 million with a coupon 10.25%, then this year for an issue worth $750 million the rate was set 1.5 percentage points lower.”

“We expect that in 2011 the total volume of funds raised by the state and Ukrainian corporate companies through the placement of Eurobonds will exceed $8 billion. For comparison, in 2010 the total issue of Eurobonds amounted to $5.6 billion. But issuers from Ukraine should hurry up,” the analyst said IC Dragon Capital Olga Slivinskaya. “The process of raising rates may begin in the world in 2011,” believes Evgenia Afonina. “It is unlikely that the US Federal Reserve System or the European Central Bank will increase them sharply, but an increase is possible no earlier than the second half of 2011.” According to the Cbonds agency, a number of Ukrainian banks, agricultural companies, as well as Ukrtelecom are planning to conduct placements in 2011.

Alexander Chernovalov

"Metinvest" is located in luxury