Privatbank bondholders schedule new meetings to change trustee

The holders of Privatbank’s Eurobonds (PRBANK) maturing in 2018 (USD 175 mln maturing in January and USD 160 mln maturing in February) arranged new meetings after being unable to reach quorum at their scheduled meetings on June 5, the bank reported the next day. The quorum was 75% of holders, while less than 45% of the holders of each of the two issues were present. Adjourned meetings with no explicit quorum are now scheduled for June 21. The key purpose of the meetings is to change the Eurobonds trustee from Deutsche Trustee Company to Madison Pacific Trust.

Recall, all Privatbank Eurobonds are in default. The bonds were bailed-in during the bank’s nationalization in December 2016. Before the nationalization, Privatbank was declared insolvent and all its Eurobonds were exchanged into the bank’s equity by the State Deposit Guarantee Fund. Afterwards, the Fund passed 100% of the bank’s equity to Ukraine’s finance ministry.

Our view: It is now more likely that the meetings on June 21 will be successful, after which the new trustee will try to sue against the bail-in of Eurobonds. Given the recent interim success of some of the bank’s other creditors in the Ukrainian courts, bondholders have a legitimate shot at recovering their bonds.