Azerbaijan’s largest bank offers debt swap to creditorsMay 25, 2017 - 12:55 AMT PanARMENIAN.Net - Azerbaijan’s largest bank has offered creditors to swap debt for new sovereign bonds after the troubled lender said it needed to restructure $3.4bn worth of debt earlier this month, Financial Times reports. State-owned International Bank of Azerbaijan has been hit by an economic crisis in the former Soviet republic caused by the slump in oil prices since 2014. This severely hurt the country’s economy and has seen its currency plummet more than 50 per cent over the past two years. The bank has already sought government support to shift 9.93bn manats ($5.9bn) worth of toxic assets off its balance sheets. The scale of the bank’s restructuring has raised alarm of wider financial impact in Azerbaijan. One of its creditors is the national pension fund of Kazakhstan. Under the restructuring plan, senior creditors, including Eurobond holders, can choose to swap their debt into new sovereign bonds with a 12-year maturity and a 5.125 per cent rate, but with a 20 per cent cut in the value. Another choice would be to swap for 15-year sovereign debt at 3.5 per cent at par, while the third option is to stay with the bank and be issued new seven-year 3.5 per cent bonds in IBA. Trade finance instruments owed $861.5m will be offered four-year sovereign paper at par, while $100m of subordinated debt will face a haircut of 50 per cent. The restructuring will become binding on all creditors if approved by those accounting for two-thirds of the affected debt by value. “It was obvious that only measures to buy out toxic assets will not be sufficient . . . we need to do a liability restructuring,” Azerbaijan’s finance minister Samir Sharifov told investors. “We endorse this plan . . . and are backing it with public funds,” he said. “We encourage you to support it.” Azerbaijan will increase its sovereign debt by $2.34bn under the plan and increase its debt-to-GDP ratio to around 27 per cent, Sharifov said. Rating agency Moody’s last week said it had initiated a review for a possible downgrade of Azerbaijan’s Ba1 long-term rating, expecting that Baku would be forced to provide additional funding to the bank. IBA reported a preliminary Tier-1 capital ratio of -4.7 per cent at the end of 2016. The restructuring plan, if approved, will help to increase that to 13.25 per cent, its chairman Khalid Ahadov said. Creditors will be asked to vote on the plan on July 13, and the bank expects to conclude the restructuring by mid-August. Top stories Authorities said a total of 192 Azerbaijani troops were killed and 511 were wounded during Azerbaijan’s offensive. In 2023, the Azerbaijani government will increase the country’s defense budget by more than 1.1 billion manats ($650 million). The bill, published on Monday, is designed to "eliminate the shortcomings of an unreasonably broad interpretation of the key concept of "compatriot". The earthquake caused a temporary blackout, damaged many buildings and closed a number of rural roads. Partner news | Scholz hopes Armenia-Azerbaijan peace treaty will be signed this year German Chancellor Olaf Scholz hopes that a peace treaty between Armenia and Azerbaijan will be signed this year. Ucom equips four bus stops in Ijevan with free Wi-Fi Ucom now provides free Wi-Fi coverage in smart bus stops in four communities of Ijevan. Armenia, Russia discuss life extension of Metsamor nuclear plant Issues regarding the extension of life of the 2nd power unit of the Armenian Nuclear Power Plant were discussed in Yerevan. Armenians stage more campaigns against territorial concessions to Azerbaijan Protesters blocked more roads across Armenia on Friday, April 26 in continuing attempts to scuttle territorial concessions to Azerbaijan. |