Page 102 - bneIntelliNews monthly country report Russia May 2024

main ratings have all suspending their ratings for Russia which has an NR rating from all three of the big agencies. The last ratings were issued in March shortly after the war started and put Russia on “near default” across the board.
8.5 Fixed income
Acron is preparing to issue yuan bonds According to Interfax, complex fertiliser producer Acron PJSC (ruAA Expert RA) plans to issue local bonds on May 21 in the amount of up to CNY1.5 billion (₽19.3 billion) with repayment in 2 years. It is not entirely clear to what extent the issue will represent a reformatting of bank debt (at the end of 2023 the company had a large amount of short-term debt, mainly dollar loans issued, apparently, by Russian banks in 2022), but the parameters of the issue (quarterly coupon, depreciation 50% body in 1.5 years), a fairly generous target (8% coupon) and a long marketing period suggest the intention of partial syndication of the release to the market.
Historically, issuers have entered the public debt market infrequently, periodically placing only local bonds; The company has never had Eurobonds/CLN. Currently, there are still formally two Acron BO issues in circulation (placements in 2016–17), apparently mostly purchased by the issuer through put options (for both of them in 2020–23, low non-market coupons were set during the reshuffle). The company’s reporting for 2021–23 is good, showing the generation of positive FCF and debt reduction, which is why Expert RA upgraded its rating at the end of 2023, well deserved. A moderately negative factor is the large amount of short-term debt, which the company, due to its undoubtedly good credit quality, can probably refinance from various sources; The main problem is the cost of financing in the current environment. In our opinion, according to the stated guideline, the release offers an attractive combination of price and quality.
Substitution of subordinated Eurobonds Alfa-Bank. The Board of Directors of Alfa-Bank on Thursday (April 25) will consider the issue of placing an issue of replacement bonds (ZO) series ZO-350, intended for the exchange of the issue of subordinated Eurobonds Alfa-Bank-31T2 ($350mn, XS2333280571). The Eurobond was placed in April 2021, registered on the Moscow Exchange, but does not have a listing and is not traded in the order book (another T2 issue of the bank, Alfa-Bank-30T2, is quite actively traded in the order book in small pieces). The coupon in the issue is reset in October 2026 from the current 5.5% to 5Y UST +455 bps; in the currently exchanged issue of 30% for Alpha perp 5.9%, the bank fully retained the structure and sise of coupons of the replaced Eurobonds; One can probably expect that this approach will be applied to other exchanged subords/perms of the bank. In the case of Alpha perp 5.9%, three weeks passed between the decision of the board of directors and the start of the exchange. The bank exchanges its Eurobonds for 30 without assigning the rights of claim (i.e., only securities accounted for in
102 RUSSIA Country Report May 2024 www.intellinews.com