CIS Credit Monitor: Alfa-Bank Ukraine, Transneft

In this issue:

- Alfa Bank Ukraine (CCC/B3/NR) announced a restructuring plan of its outstanding debt
- Transneft (BBB/Baa1/NR): FY2008 IFRS results


Alfa Bank Ukraine (CCC+/B3/NR) announced a restructuring plan of its outstanding debt
This morning, Alfa Bank Ukraine announced the exchange offer plan for the bank’s current outstanding debt. The restructuring plan includes the combination of a cash offer and exchange for new notes. The amount offered in cash varies between 15% and 27% of the principal depending on the debt security. The remaining principal will be exchanged for a newly issued paper with three years maturity and a higher coupon rate at 13%. In our view, the terms of the offer are rather disappointing for bondholders with a limited cash amount and a small stepper of 13% coupon. At present, ALFAUA 2011 eurobond with a put option in August 2009 is already paying a 12% coupon.

Transneft (BBB/Baa1/NR): FY2008 IFRS results
Transneft, a major oil transportation company in Russia, yesterday published its FY2008 IFRS results. The company posted a 24% increase of revenue year on year, EBITDA increased 27% according to our estimates, Net income was up only 12% year on year due to an FX loss of RUB 31.3bn and significant increase in interest payments which was due to the 57% growth in total debt. Still the company’s credit profile remains strong; it retains a comfortable liquidity position and access to financing. At the moment Transneft Eurobonds are priced without a premium to the Gazprom curve and therefore the upside potential seems limited.