Debt portfolio management
In 2018, the Group’s short-term debt and leverage decreased, while the longterm debt went up. At the end of 2018, RusHydro Group’s total and net financial debt stood at RUB 226.5 bn and RUB 131.1 bn, respectively. Given higher consolidated operating income in 2018 and smart intesting policy, net financial debt / EBITDA declined to 1.2x as at December 31, 2018 vs 1.4x as at December 31, 2017. This means sustainable improvement of the Group’s financial position since 2016.
The period under review saw an increase in long-term borrowings, mainly due to the placement of three Eurobond issues in 2018 (one issue worth RUB 20 bnThe issue won annual Cbonds Award 2018 as Best Primary Eurobond Deal. placed in February and two issues worth RUB 15 bn and 1.5 bn offshore Chinese renminbi placed in November). On top of that, in April 2018, RusHydro and the Far East and Baikal Region Development Fund entered into a special-purpose loan agreement worth RUB 5 bn to finance the construction of off-site facilities of Sakhalinskaya GRES-2. In July 2018, the Group also successfully raised RUB 20 bn under a loan agreement with VTB Bank. At the end of 2018, the rate of ruble-denominated borrowings averaged about 8% per annum. In December 2018, RusHydro prepaid an ECA-covered FX loan of some EUR 69 mn from UniCredit Bank Austria AG.
In 2018, the Group was also bringing down its short-term debt. In February 2018, RusHydro repurchased its series 07 and 08 In February 2018, the holders of of RusHydro’s series 07 and 08 ruble bonds issued in February 2013 for a total amount of RUB 20 bn, partially used their put option for securities. Bonds that were not put by the holders for early redemption, with the nominal value of RUB 2,196 mn will be floating before the maturity date in 2023. ruble bonds under the put option for a total of about RUB 18 bn. In March, the Group repaid a loan of RUB 10.6 bn from Sberbank. July saw a successful redemption of series BO-P01, BO-P02 and BO-P03 exchange bonds worth RUB 15 bn. In February 2018, the Group terminated its contract of guarantee to meet obligations of PJSC Boguchanskaya HPP under a loan agreement with VEB worth RUB 25.9 bn as at December 31, 2017, which also helped reduce leverage.
As at December 31, 2018, the shares of the Group’s ruble-denominated and fixed-rate consolidated financial debt (excluding liabilities on the non-deliverable forward with VTB Bank (PJSC), including hedging ruble liabilities to issue Eurobonds denominated in offshore Chinese renminbi) account for about 98% and 91%, respectively. This means the minimum level of currency and interest risks for the Group in terms of financial debt.
More information on the main changes in the structure of long- and short-term debt (excluding forward) is available below.
In 2018, the long-term part of the Group’s borrowings surged by RUB 67.036 bn (73.7%) to RUB 157.9 bn, mainly driven by long-term financing raised through three Eurobond issues in 2018 (two denominated in rubles and one – in offshore Chinese renminbi) and bilateral loan agreements.
In 2018, the short-term part of the Group’s borrowings dropped by RUB 39.7 bn (50.5%) to RUB 38.9 bn, primarily due to the maturity of long-term loans and bonds (including exchange and local bonds totaling about RUB 15 bn and about RUB 18 bn, respectively). As the remaining drawdown for the Group’s current loan agreements amounted to more than RUB 191 bn at the end of 2018 and substantially exceeds the need for short-term debt refinancing, financial risks are considered as insignificant.
As at December 31, 2018, the outstanding bonds of RusHydro include seven issues for a total amount of RUB 70.0 bn (the aggregate value of outstanding bonds is RUB 28.2 bn).
|Issue parameters||Series 01 and 02 bonds||Series 07 and 08 bonds||Series 09 bonds||Series BO-P04 exchange bonds||Series BO-P05 exchange bonds|
|Bond type||Non-convertible certificated interest-bearing bearer bonds with mandatory centralized custody||State registration number|| 4-01-55038-E |
| 4-07-55038-E |
|Face value||RUB 1,000||Registration date||23.09.2010||27.12.2012||27.12.2012||01.04 2016||09.06 2017|
|Nominal amount of each issue|| Series 01 – RUB 10 bn |
Series 02 – RUB 5 bn
Series 07, 08, 09 – RUB 10 bn each
Series BO-P04 – RUB 15 bn
Series BO-P05 – RUB 10 bn
|Offer date||22.04.2016||13.02.2018|| 27.10.2017 |
|Offering price||100%||Coupon rate|| Coupons 1–10 – 8.0% p.a. |
Coupons 11–20 – 9.5% p.a.
| Coupons 1–10 – 8.5% p.a. |
Coupons 11–20 – 0.1% p.a.
| Coupons 1–5 – 12.75% p.a. |
Coupons 6–16 – 7.5% p.a.
Coupons 6–16 – coupon rate to be determined by the issuer
|Coupons 1–6 – 10.35% p.a.||Coupons 1–6 – 8.2% p.a.|
|Form of offering||Open subscription, bookbuilding||Yield||8.16%||8.68%||13.16%||10.62%||8.37%|
|Coupon payments||semi-annual||Last trade yield as at December 28, 2018, % p. a.|| Series 01 – 7.75% |
Series 02 – 8.19%
| Series 07 – 8.1% |
Series 08 – 8.93%
|Series 09 – 8.22%||Series BO-P04 – 7.69%||Series BO-P05 – 7.75%|
As of December 31, 2018, the outstanding bonds of RusHydro include four issues of Eurobonds for a total of RUB 55 bn and 1.5 bn of offshore Chinese renminbi placed by RusHydro Capital Markets DAC company on Irish Stock Exchange under Reg S rules. All issues have the confirmed long-term rating from S&P / Moody’s / Fitch / ACRA aligned with RusHydro’s credit rating.
|Offering date||Maturity date||Issue currency||Amount, bn||Coupon rate, %||Coupon payments||ISIN|