Astana Finance, the last of a quartet of Kazakh financial services providers to restructure its foreign debt, has shocked senior creditors with its latest write-off proposals.
The terms Astana Finance proposed in August would force Eurobond holders to accept an 80% haircut on principal and accrued interest on roughly $1.2 billion-worth of international debt, while they would receive zero-coupon 2016 notes for the remaining 20% balance.
Andre Andrijanovs, fixed-income analyst at emerging market debt trading specialist Exotix in London, says that the latest proposal means Eurobond holders can expect a cash return which represents a net present value offer of only 6% of their original investment, compared with the 16% that Astana Finance offered in December 2010 – an offer that was rejected by creditors. Andrijanovs describes the latest offer to senior creditors as "exceptionally poor".
On the other hand, he says the offer gives trade finance creditors, especially government-sponsored export credit agencies (ECAs), preferential treatment. ECAs, with about $300 million of claims, will not suffer any haircut and will receive a 10-year, 1.5% coupon bond for settlement, which Andrijanovs estimates is a net present value of around 30% of par of the initial claim.