Metinvest lands record $1.5 billion loan, signaling growing investor confidence in Ukraine
The steel and oremining empire of Ukraine’s richest billionaire, Rinat Akhmetov, has landed a record $1.5 billion syndicated loan from a group of leading European banks.
The loan, awarded to Metinvest Holding by a syndicate of banks led by lead managers ABN AMRO, BNP Paribas, Deutsche Bank and ING, represents the biggest borrowing ever received by a private company in Ukraine.
It also signals that the appetite of Ukrainian companies for international money-market financing is increasing in line with growing lender confidence.
Ukrainian companies have borrowed nearly $6 billion through syndicated loans since the beginning of 2005, with Metinvest’s loan accounting for about one-fourth of this amount.
Loans in recent years have become significantly larger and less expensive for Ukrainian companies. Metinvest’s loan is three times larger than the previously largest syndicated loan of $512 million received this April by Raiffeisen Bank Aval.
What’s more, Metinvest’s loan was granted at LIBOR+1.7 percent, which is a record low rate for syndicated loans received by Ukrainian companies.
Eager to modernize and revamp their Soviet-built assets and pump fresh cash into new ventures, Ukrainian companies have stepped up borrowing ever since the Orange Revolution slapped the country onto investors’ radar screens. Companies have raised more than $10 billion through credit lines, Eurobond placements and stock listings since the Orange Revolution.
Metinvest, whose control over several mines and steel factories make it Ukraine’s largest steel producer, received the first tranche of the loan, $1 billion, on July 23. The record five-year loan received by Metinvest will be used to finance investments and refinance more expensive loans.
Ukraine, the world’s seventh largest steel-producing country, is home to several other large business conglomerates, which have been borrowing billions in recent years to boost efficiency and expand operations.
Landmark loan
Serhiy Boychenko, head of structured financing for CIS countries at BNP Paribas, said, “the scope of the loan” and [an impressive] list of lead managers has propelled Metinvest into one of the “leading positions among borrowers in Eastern Europe.”
“And this confirms the attractiveness of Ukrainian companies on the international markets of syndicated loans,” he added.
Viktoria Masna, Head of Financial Institutions at Raiffeisen Bank Aval, said that the loan “sets another benchmark and will positively influence investors’ awareness toward Ukrainian corporations.”
“We hope to see more corporate deals on the market alongside ones in the financial sector, setting new benchmarks in pricing, tenor and maturity. Funding attracted on such favorable conditions will allow Ukrainian companies to increase their competitiveness on both local and international markets,” Masna added.
Akhmetov, who controls a broad portfolio of assets through his main holding company, System Capital Management, is one of many Ukrainian tycoons seeking investment capital to modernize and restructure aging Soviet-built industrial factories and develop new businesses.
Metinvest Holding General Director Ihor Syriy said his company would invest more than $4 billion into the development of its business in the next five years.
To achieve its goals, the company plans to use its own money and attract financial resources on international money markets.
Metinvest and Akhmetov’s energy holding DTEK are among a dozen tycoon-controlled conglomerates that have also contemplated raising investments through initial public offerings. Dozens of leading Ukrainian companies have raised badly needed investment capital through Eurobond placements in the last several years.
