Nadra offers 15 cents on the dollar in a restructuring plan

According to Bloomberg, Nadra bank has sent out a debt restructuring presentation today. Nadra will send out detailed term sheets to noteholders on June 26th and intends to collect feedbacks by June 29th .

The presentation indicates following proposals for eurobond investors:

Plan A) Buy-back at 15% of par, with cash for buy-back limited to $20m

Plan B) Discounted rescheduling

-Writing off 60% of the principal

- bullet repayment in July 2015

- 9,25% interest rate

The bank is in the worst shape in distressed debt universe (at least in distressed area of Ukrainian financial sector). Nadra reported 0.4% capital adequacy ratio as of June, 1st given that it had recorded 10% of its loan portfolio in provisions (UAS). Any further worsening of credit quality (which is quite possible given that Nadra was predominantly focused on retail) would push the bank into negative equity.

The government is ready to inject UAH 5.5 bn of capital in order to support ailing bank, but only after restructuring of outstanding debt. The latter includes $175m Eurobond, over $400m in trade finance and bilaterals and $68m in local bonds.

Liquidation of Nadra is considered as possible option. The bank is still “too big to fail” but its importance vanishes each day : a) it is virtually absent on the interbank market b) Deposit Guarantee Fund (DGF) is able to execute all claims provided that NBU has already adopted framework which allows the DGF to draw necessary amount of funds from NBU in order to pay back retail depositors.

(please find Nadra’s balance on the next page)