Experts: a technical default on the bonds “Transaero” can occur on 29 October

MOSCOW, October 16. /Corr. Nikita Zharkov/. A technical default on bonds of Transaero as soon as 29 October, interviewed experts. The price of the exchange bonds BO-03 3 billion is at the level of 3,72% from face value and offer for these securities is set at par and appointed on 29 October of the current year. At “Transaero” there is no money to pay this debt.

The airline incurs losses for three consecutive years, and its assets under IFRS at the end of last year was negative – minus 52.6 billion at the end of the first half of the current year and minus 54.4 billion rubles at the end of 2014 (according to the report for the first half). For bondholders negative equity under IFRS – a reason to demand early repayment, but if the debts have not been paid, the holders of bonds may seek to recover the debt in court.

“Most likely, first there will be recorded a technical default. Either there will be something offered to the holders of bonds that, if happens, it happens immediately. Quotes now reflect the fact that creditors will suffer losses, since the probability of receipt of funds by small investors,” – says the head of debt markets “URALSIB capital” Dmitry Dudkin.

Currently in circulation is only two bond “Transaero”, and both editions of exchange bonds. The price of bonds series BO-02 2.5 billion (maturing in December 2016 and a put option in December 2015) was 1 September 92,04% of par, and for a month and a half so far fell to 4.08% from face value.

The price of bonds series BO-03 at 3 billion (with maturity in October 2018 and offer 29 October) on the 1st of September was at 93% and on 16 October fell to 3.72% from face value.

“These quotes shows that investors do not expect repayment of the securities, and the current news flow suggests that the company has no funds to repay the debt,” says chief analyst of the group of analysis debt markets PSB Dmitry Monastyrshin.

In the case of “Transaero” possible technical default on the bonds, agrees senior portfolio Manager of “Capital” Andrew Vallejo-Roman. “The question is, how will negotiations with the holders of bonds. Maybe they will be persuaded not to present the bonds for redemption. Then technically it would be possible to avoid default,” he said.

However, according to the Manager, investors are not fundamentally, or may not be bonds of Transaero to trade in technical default because the company, according to market, is already bankrupt. “If it wasn’t filed claims bankruptcy, technical default would be a reason to bring such claims. And since we all know that, in fact, the company is already bankrupt, then a technical default won’t change it”, – he noted.

Claims to “Transaero” has already filed a company controlled by Rosneft, and several airports, including Domodedovo and Pulkovo. In addition, the claim to “Transaero” on 5 billion roubles filed Aeroflot. The airline’s total debt is about 250 billion rubles. Among the major creditors was called Sberbank, VTB, VEB, Gazprombank and others. Alfa-Bank filed September 16 the claim to arbitration court about collecting with “Transaero” more than $11.3 million (about 735 million).

Also, the Bank “FC Opening” submitted the claim to arbitration to the airline at 1.3 billion rubles. During the international investment forum “Sochi-2015”, the head of Sberbank German Gref said that Sberbank intends in the future to resort to bankruptcy procedure in the case of “Transaero”.

If the company does not perform its obligations, possible 2 scenarios: restructuring or a claim for bankruptcy, explains Dmitry Monastyrshin from PSB.

“In theory, if restructuring is the emission of a new bond issue and the holders of change the paper default of the loan on the new paper. Prescribed maturity securities, investor meetings and company justifies that in the future she will be able to pay on the new issue, which will be lengthened schedule of repayment of paper – it will be smoother. And when the company will restore its financial performance, it will be able to repay its debt,” – explained the expert the process of restructuring bonds.

Another scenario is when the company is unable to pay obligations on the bonds, suggests that the bondholders can sue the claims on bankruptcy companies similar to banks. In this case, the bondholders will receive their money in the third stage – after the state and creditor banks.

Among the victims of the bondholders will probably be a lot of private traders who had hoped for a favorable outcome of the situation with debts of “Transaero”. According to Dmitry Dudkin from “URALSIB capital”, exchange-traded bonds of Transaero were liquid enough for its class and enjoyed good demand from private traders, small mutual Funds and other small investors. “This is probably the smallest investors because, for example, since the beginning of October in BO-03 was a turnover of 68 million rubles. This is a very small amount. While the number of transactions on the stock exchange large – up to 400 transactions per day,” he said.