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Azerbaijan IBA creditors offered swap into sovereign debt
May 23, 2017 / 11:32 AM / 7 months ago

Azerbaijan IBA creditors offered swap into sovereign debt

LONDON, May 23 (Reuters) - The International Bank of Azerbaijan on Tuesday offered creditors several options in its debt restructuring, including swapping into 12- or 15-year sovereign bonds, the former involving a write-down.

Eric Lalo, managing director at Lazard which is advising the bank, said trade finance instruments could be exchanged for sovereign paper at par, repayable over four years and amortising annually.

Lalo said senior creditors, including Eurobond holders would have three options, the first being swapping into sovereign bonds with a 12-year maturity but amortising in three annual installments in years 10,11 and 12. These would carry a 5-1/8 percent rate and with an “enhancement value” priced at 20 cents in the dollar.

“This is nor one for one exchange,” Lalo told investors.

The second option involves a one-on-one swap into 15-year sovereign debt while the third option is to stay with IBA, with bonds exchanged at par for a 7-year 3.5 percent issue, Lalo said.

The bank last week said it was suspending payments on some liabilities and seeking creditors’ support to restructure more than $3 billion of debt.

Finance Minister Samir Sharifov told creditors the government debt-to-GDP would rise by $2.34 billion to 27 percent of GDP as a result of the restructuring. He said debt holders would receive significant “credit enhancement” by getting instruments of the higher-rated sovereign.

IBA is being also represented by White & Case. (Reporting by Sujata Rao and Karin Strohecker)

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