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Posted On

08
September
2022

Concorde Capital considers high probability of restructuring debts of Ukrzaliznytsia, Kernel, Interpipe, DTEK Energy, DTEK Renewables and Metinvest

KYIV. Sept 8 (Interfax-Ukraine) – Ukrzaliznytsia, Kernel, Interpipe and DTEK Energy have the same or even more fundamental reasons than the Ukrainian government for applying for a debt restructuring, say analysts at investment company Concorde Capital, one of the leading in the Ukrainian market.

"Naftogaz Ukrainy has already applied to creditors, and the likelihood that the rest will have to restructure their debt now looks high," the company’s analytical report says.

"Metinvest and DTEK Renewables are now in serious trouble, so unless there are radical changes in the war, a restructuring of their debt looks inevitable," Concorde Capital added.

At the same time, investment company analysts note that DTEK Oil&Gas, Vodafone Ukraine, MHP, state-owned Ukreximbank and Oschadbank are fundamentally stronger than the Ukrainian government or Ukraine on average, so they have good chances and/or reasons to continue servicing debt.

Concorde Capital points out that out of 14 issuers of corporate bonds, of which state-owned Ukrenergo and Ukravtodor, following the sovereign, have already achieved a deferral of payments on their state-guaranteed eurobonds, five have not change their revenue, while DTEK Oil&Gas has even increased it, eight of them do not depend on the unblocking of ports.

If on average 15% of the assets of all these companies remain at risk, then only four have this indicator exceeding 20%: Ukrzaliznytsia and DTEK Energy – 25% each, Metinvest – 49% and DTEK Renewables – 100%.

Kernel, Ukrzaliznytsia and Metinvest are highly dependent on the ports, their revenues have decreased by 45% or more, while MHP and Interpipe have an average dependence, which revenues have fallen by 20% and 45%, respectively.

"While war is a great excuse to ask for debt relief, we see that not all eurobond issuers will have that need or motivation," the analysts said.

Concorde Capital points out that many companies were less vulnerable because they were oriented to the domestic market (although they are still exposed to foreign exchange risk).

"One of the biggest shifts that the war has brought to Ukrainian companies, aside from security issues, is that large export-oriented companies that were treated better than those that are oriented to the domestic market lost their status of superiority," analysts said.