Emerging Markets: Development Bank of Kazakhstan eyes dollar benchmark; Petropavlovsk defaults

By Rebecca Melvin

New York, April 29 – The emerging markets debt primary market was mostly quiet during the last week of April amid a rising dollar and rising yields. The JSC Development Bank of Kazakhstan said Tuesday in a release that it planned to price a dollar-denominated eurobond benchmark. That deal was expected to price on Thursday, but details were not seen by Prospect News by Friday.

The Development Bank of Kazakhstan deal, an expected $500 million benchmark of three-year duration, was to be the first issue in the Commonwealth of Independent States region since Russia began its war on Ukraine on Feb. 24.

The bank, based in Nur-Sultan, Kazakhstan, also initiated on Tuesday an offer to purchase for cash up to $700 million of its $1.25 billion outstanding 4 1/8% notes due 2022.

Elsewhere, First Abu Dhabi Bank PJSC priced RMB 133 million of 4% senior notes due April 27, 2025 at par, according to notice.

The series 135 notes were issued under the bank’s $20 billion euro medium-term note program.

Mizuho International plc was dealer of the non-syndicated offering, for which proceeds will be used for general corporate purposes.

First Abu Dhabi Bank is a lender operating in the United Arab Emirates.

Israel Electric Corp. Ltd. said it plans to issue bonds to the public by expanding its series 32 bonds or series 33 bonds, which were originally listed for trading on the Tel Aviv Stock Exchange Ltd. in July 2021.

The bonds will be issued under the company’s NIS 1 billion shelf prospectus dated May 28, 2021.

The electricity company is based in Haifa, Israel.

Central American Bank for Economic Integration (Cabei), postponed its dollar-denominated Rule 144A and Regulation S offering of social bonds due 2027 on Wednesday due to market conditions.

The notes had been talked at yield in the area of SOFR mid-swaps plus 90 basis points.

Citigroup, Credit Agricole and Standard Chartered held global fixed-income investor calls for the deal.

And the pain associated with Russia’s war in Ukraine and resulting international sanctions appeared to deepen. Petropavlovsk plc said Friday one or more events of default have occurred regarding its $500 million 8 1/8% guaranteed notes due 2022 and $125 million 8¼% guaranteed convertible bonds due 2024.

The defaults occurred because of an acceleration of its term loan and revolving credit facilities with Gazprombank as lender, according to an update published by the company.

As reported April 20, Gazprombank was seeking immediate repayment of amounts due under those credit facilities, including repayment of $201 million under the term loan and $87.1 million due under the group’s subsidiaries’ revolving credit facilities.

Gazprombank required repayment by April 26, Petropavlovsk said, but no acceleration of the guaranteed notes or convertible bonds has occurred at this time.

Previously Petropavlovsk said it was unable to make the interest payment or make Gazprombank an off-taker of 100% of the group’s gold production, which is a condition of its revolving credit facilities and term loan, due to U.K. sanctions and the Gazprombank asset freeze.

The Russian gold producer has mines and a pressure oxidation hub in Russia’s eastern Amur region.

United Arab Emirates’ Borets Finance DAC also said it has suffered a default, notifying the trustee of its $330 million issue of 6½% guaranteed notes due April 7, 2022 (ISINs: XS1596115409, US09973BAA70) that despite the group having sufficient funds to fulfill its obligations under the notes, those obligations were not met. according to a company announcement on Monday.

There are $155,566,000 outstanding notes from the $330 million issue.

The issuer has not paid the outstanding amount of the principal and interest due on April 7 within the applicable grace period as a result of the group’s inability to fund the issuer amid existing legal restrictions imposed by the Russian authorities.

The group said it is taking steps to remedy the default event, including by obtaining a governmental permit from Russian authorities to enable it to fund the issuer to pay the amount due. But it isn’t able to forecast how much time will be required to secure a governmental permit, and no assurance can be given that a permit will be ultimately issued or that the group would be able to comply with conditions stipulated in the permit.

Russia-focused Borets Finance is a subsidiary of Borets International Ltd., which makes electrical submersible pumps for the oil and gas industry and has its global headquarters in Dubai.

Meanwhile, SovCom Capital DAC issued a notice that it has canceled an interest payment due on the subordinated loan agreement it has with Sovcombank PJSC based on an issue of $300 million of 7¾% perpetual loan participation notes (ISINs: XS2113968148, US84605LAB27), according to notice.

The cancellation takes out $5,812,500 in interest for the period from and including Feb. 6 to the next interest payment date of May 6.

The notes were issued Feb. 6, 2020 by, but with limited recourse to, SovCom Capital for the sole purpose of financing a subordinated loan to Sovcombank.

The noteholders are deemed to irrevocably waive their right to receive and no longer have any rights against the issuer or any other party with respect to payment of the canceled interest.

BNY Mellon Corporate Trustee Services Ltd. is the trustee.

Sovcombank is a bank based in Moscow.

Russia’s PJSC PhosAgro said it paid PhosAgro Bond Funding DAC, the issuer of $500 million of 3.949% eurobonds due in 2023, the full interest due on the bonds and that the issuer instructed the principal paying agent to make the payment to bondholders but that the agent has not yet made that payment, according to a filing with the London Stock Exchange.

PhosAgro said it paid the full $9,872,500 of interest on April 6, more than a week ahead of the due date, and that the issuer instructed the agent, Citibank NA, on April 20 to make the coupon payment, but that instruction had “not been carried out on account of additional steps being taken by the principal paying agent” as of Thursday.

The company said it has tried for several days to ensure that the coupon payment is made by providing all requested information.

“Notwithstanding the fact that the company is considered to have fulfilled its obligation to pay the coupon in accordance with the bond issue documentation, the company will continue to make every possible effort to facilitate the coupon payment by the principal paying agent as soon as possible and will inform investors of the status of said payment,” Thursday’s statement said.

PhosAgro is a Moscow-based chemical holding company.

In other regions, Heritage Petroleum Co. Ltd. commenced a cash tender offer and consent solicitation for any and all of the outstanding 9¾% senior notes due 2026 (ISINs: US896366AA98; USP9401BAA28) issued by its sole shareholder, Trinidad Petroleum Holdings Ltd.

There is $570,265,000 principal amount outstanding of the notes, which are guaranteed by Heritage, Paria Fuel Trading Co. Ltd. and the Guaracara Refining Co. Ltd.

Heritage is also soliciting consents to some proposed amendments to the indenture governing the notes.

The total consideration that the company will pay for the notes is $1,075.63 per $1,000 principal amount of notes, which includes a $50 early tender consideration for each $1,000 of notes tendered by 5 p.m. ET on May 10.

Heritage is primarily engaged in exploration, development, production and marketing of crude oil. Its sole shareholder, the issuer of the 2026 notes, is an integrated national oil and gas company in Trinidad and Tobago whose ultimate parent is the government of Trinidad and Tobago.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.