January 18, 2018 | Cbonds
|Ukraine’s nationalized financial institution Privatbank (PRBANK) has sent its response to the claims of the holders of its Eurobonds to the London Court of Arbitration, according to its exchange announcement on Jan. 17, providing no other details. Recall, a trustee of the bank’s senior notes filed an acceleration request on Nov. 2 and initiated an arbitration hearing in London against the notes’ bail-in on Nov. 8. The deadline for the bank to submit its response to bondholder claims was initially Dec. 6 and was later postponed till Jan. 17.|
Privatbank was declared insolvent and nationalized in December 2016. Since then, the bank got an additional capital injection in the total amount of UAH 184.7 bln (USD 7.0 bln). Of this amount, UAH 29.4 bln (USD 1.1 bln) was drawn from the bailed-in liabilities of the bank, including USD 0.55 bln of the bank’s senior and subordinated Eurobonds.
Alexander Paraschiy: Most likely, the response from the bank and the Ukrainian government in justifying the bail in will be based on the "no creditor worse off" (NCWO) principle. In oarticular, they will try to argue that the bondholders wouldn’t have received any more compensation if the bank had been liquidated. The bondholders' strong point could be precedents in the Ukrainian courts in which several high-profile bailed-in depositors of the bank managed to overturn their assets being written off. At this stage, it is hard to estimate the chances for any party to succeed in the litigation.
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