MOSCOW, Nov 14 Russia's central bank said on Thursday that bonds issued by mining group Mechel would be zero-rated as collateral, effectively ruling out their use in refinancing operations.
The one-line statement followed a 40-percent slump in the price of Mechel's and a sell-off in its bonds - some of which have triple-digit yields - indicating that the market believesthe company cannot sustain its $9.6 billion debt load.
The central bank said that a coefficient applying to Mechel's bonds as collateral would be reset to zero with
immediate effect. Mechel had no immediate comment.
"It effectively means that the bonds are excluded as a means of obtaining refinancing," said Denis Poryvai, a fixed-income analyst at Raiffeisen.
Yes, steel outlook up will lift MTL out of all their problems because Goldman Sach was responsible for MTL's problems all along. Right now only a miracle will move MTL like this:
MOSCOW VTB , the Russian state-controlled bank, has agreed to join other creditors in restructuring the $9.6 billion (5.9 billion pounds) debt of mining group Mechel , a source close to the bank said on Saturday, confirming media reports.
"We confirmed that we and other banks are ready to restructure," the source told Reuters on condition of anonymity. VTB had been holding out over Mechel's bid to win a waiver of loan covenants and terms of a debt restructuring.
Separately, the central bank said that from Monday Mechel's bonds and shares would again be eligible as collateral pledged by banks in refinancing operations.
Shares in the coal-to-steel group slumped to an all-time low on Wednesday. Fears about its viability were fuelled on Thursday when the central bank ruled that its bonds were worthless as loan collateral.
(Reporting by Douglas Busvine; Editing by Jason Bush and Louise Ireland)
A Businessweek report mentions $153M (5B RUR face value) of 2021 bonds. Is this what you are referring to?
Mechel's website lists corporate rouble bonds with total face value of 40B RUR. I found the Russia Central Bank Lombard list and ALL those bond issues are now highlighted in red on the RCB website (red-listed is shown below). I can only assume the red means rate change to zero (from rate of 0.7). So that's more like ~$1.2B affected, not $150M.
4-04-55005-E Mechel OAO 901.5 0.7 RU000A0JQ8V9 07/15/2016
4-13-55005-E Mechel OAO 630 0.7 RU000A0JR0K8 14/08/2020
4-14-55005-E Mechel OAO 623.7 0.7 RU000A0JR0J0 14/08/2020
4-15-55005-E Mechel OAO 782.7 0.7 RU000A0JR8L9 29/01/2021
4-16-55005-E Mechel OAO 783.1 0.7 RU000A0JR8P0 29/01/2021
4-17-55005-E Mechel OAO 600 0.7 RU000A0JRJS2 18.05.2021
4-18-55005-E Mechel OAO 649.1 0.7 RU000A0JRJT0 18.05.2021
4-19-55005-E Mechel OAO 598.7 0.7 RU000A0JRJY0 21/05/2021
4B02-04-55005-E Mechel OAO 832.2 0.7 RU000A0JS3R6 30/01/2015
Interestingly, the Bank also lists MTL common and preferred shares as acceptable collateral.