SEPT. 1 2017 (The Conway Bulletin) — Azerbaijan’s troubled IBA bank issued several new Eurobonds, the final part of a restructuring plan for $3.3b of debt that has angered its foreign creditors.
Reuters reported that IBA had issued a $1b Eurobond due in 2024 with a 3.5% coupon and that it had issued seven other new Eurobonds, due between December 2017 and September 2032, with an additional total value of $2.266b.
The reaction to the debt issue from foreign buyers was mixed with some welcoming IBA’s return to the market but others warning that there has been little structural changes in the Azerbaijani banking sector and that a repeat of the debt default was a real possibility.
In a statement, Khalid Ahadov, Chairman of IBA, said: “The successful closing of the restructuring process earlier today is a key step in the Bank’s plan to ensure its long-term viability.”
He also said that the bank planned to transfer bad assets to the state’s bad debt vehicle Aqrarkredit. “The combination of these two transactions will restore the Bank’s capital position, provide the Bank with the necessary financial strength to implement its business plan,” he said.
Traders in London told Reuters that demand for the IBA Eurobonds had been strong. In May, IBA had suddenly said that it was going to default on debt repayments. It pushed through a restructuring plan that effectively forced its creditors to take a 20% cut in their investments. At the time, debt holders said the restructuring plan had caused massive damage to Azerbaijan’s reputation as a place to invest.
ENDS
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(News report from Issue No. 342, published on Sept. 7 2017)
