Alfa-Bank hereby informs about the situation with the payment of the next coupon on T2 subordinated eurobonds issued by Alfa Bond Issuance PLC Ireland in the amount of USD 350 000 000, with interest rate of 5,50% per annum, call option on 26.10.2026 and maturity on 26.10.2031, ISIN: XS2333280571/US01538RAG48. Alfa-Bank has received a loan from this company out of the proceeds received from the issue of eurobonds on terms identical to the terms of the issue. This eurobond issuance structure is standard for most of the russian companies.
On 24.03.2022 the UK competent authority, the Office of Financial Sanctions Implementation, imposed sanctions on the bank. Alfa-Bank immediately applied for a special license allowing the bank and the issuer to make coupon payments on eurobonds and fulfill their obligations. The bank has not received any response to this request at the moment.
On 06.04.2022 the US competent authority, the Office of Foreign Assets Control, also imposed sanctions on the bank. Alfa-Bank immediately applied for a special license allowing the bank and the issuer to make coupon payments on eurobonds and fulfill their obligations. The bank has not received any response to this request at the moment either.
Without the abovementioned special licences the imposed sanctions regime makes it technically impossible for the bank to process interest payments and for the paying agent to make further deploy of funds in favor of the noteholders.
Thus, it is currently technically impossible to fulfill obligations under the eurobonds, as provided for in the transaction documents, despite the fact that Alfa-Bank has all the necessary resources to service its debt.
Alfa-Bank hereby confirms its readiness to meet its obligations under the eurobonds in full and continues to accrue interest on the loan. The technical impossibility of paying interest is a separate failure in the operation of the international payment infrastructure and is not linked to the bank’s capital adequacy, which is still at the proper level. The bank fully complies with all capital adequacy ratios established by the Bank of Russia for systemically important banks.
As more information is received from the UK and US regulators, the bank will keep the noteholders informed of developments and will make every effort to resume payments as soon as possible. The noteholders have the right to reach out to the competent authorities – the Office of Financial Sanctions Implementation (the UK) and the Office of Foreign Assets Control (the United States) on their own behalf.