Essentially the new terms ensure more flexibility for IBA creditors and slightly higher and more frequent interest payments. They had accused the bank of preparing a restructuring programme that favours Azerbaijani debt holders.
IBA has presented different options to creditors holding $3.3b of debt, although the bottom line was that they will lose around 20% of their investments. It had said that creditors could only choose one option although it has now mellowed on this demand.
“The ‘first come, first served’ allocation mechanism has been changed to an 11 business day early bird period,” IBA said in a statement.
IBA said in May that it had missed a deadline to repay a creditor and that it needed to restructure $3.3b of debt. The announcement rocked investors and analysts who have been warning that the Azerbaijani banking system was teetering towards a default.
Bondholders were still sceptical of the new deal, saying that it was not much improved from the original proposition.
The FT quoted Lutz Roehmeyer, a portfolio manager at Landesbank Berlin as saying that he would vote against the new proposal. “International investors can’t understand why an oil-rich country with a huge sovereign wealth fund does not have the money to pay back,” he said.
Other creditors warned that Azerbaijan has damaged its reputation and will find it harder to borrow money in the future and that it needed to do much more to diversify its economy away from oil and gas.
They now have until July 18 to approve the deal.
ENDS
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(News report from Issue No. 334, published on June 26 2017)
