Does BelZhD Expect Default?

The company has defaulted on its bond debt covenants.

Belarusian Railway has failed to fulfill its obligations under its bonds. This is reported by the Ministry of Finance.

According to the official statement, it's about the non-payment of interest income for the 80th and 81st interest periods. In addition, the obligations to repay the bonds of the eleventh issue (state registration number No. 5-200-02-3505) with the circulation period from 15.10.2018 to 30.06.2025 have not been fulfilled. Recall that by placing this issue, the Belarusian Railway was able to raise $70 million, writes myfin.by.

The issue of bonds of the 11th issue was carried out with the participation of a professional participant of the securities market - the open joint-stock company "Development Bank of the Republic of Belarus". The depositary of the Belarusian Railway is Belarusbank.

The Ministry of Finance disclosed this information on the basis of Article 65 of the Law "On the Securities Market" and established a ban on the issue of securities by the Belarusian Railway in accordance with Article 15 of the law.

Reminder, the bonds of the 11th issue of BelZhD were issued to convert the fifth and sixth bond issues of $25 million each and part of the fourth bond issue of $20 million.

The fulfillment of BelZhD obligations under the bonds was secured by a guarantee totaling $119 million. The guarantors were: "Minsk branch of the Belarusian Railway" for $59.5 million and "Baranovichi branch of the Belarusian Railway" for $59.5 million.

The prospectus of the 11th issue of bonds says that in case of non-fulfillment or improper fulfillment of obligations on the bonds by the issuer, the rights on them are transferred to the guarantors.

The bonds of the 11th issue of BelZhD set variable interest income paid periodically during the bond circulation period at the rate of LIBOR for 1-year deposits in U.S. dollars as of the last working day of the calendar year preceding the calendar year of interest accrual, increased by 5.39 percentage points.

Now there is an issue of BelZhD Op13 bonds in circulation, denominated in dollars, with an issue volume of $30 million and maturity on December 31, 2026. The coupon rate on this issue is 6% per annum.

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