Pursuant to recent NBU Regulation No. 77 dated 8 August 2017 amending the Regulation No. 122 “On the Approval of the Instruction for the Issuance of the Individual Licenses for Making Investments Abroad” dated 16 March 1999 (“Regulation 122“) the NBU relieved Ukrainian banks of the need to obtain an individual license for purchasing own Eurobonds.
Accordingly, any purchase by the Ukrainian banks of Eurobonds issued to fund the loan provided by the SPV to such Ukrainian bank will be regarded as an exempt transaction.
This recent NBU’s measure is expected to substantially facilitate implementation by Ukrainian banks of any planned LMEs involving buy-back programmes or increasing the Ukrainian bank’s flexibility in carrying out any permitted and announced repurchases of Eurobonds in the open-market.
According to the Regulation 122, a Ukrainian bank can purchase certain foreign debt securities based solely on its general banking license provided that it specifically permits the bank to transact in foreign currency on international markets.
In summary, these currently are the following debt securities:
- debt securities were issued by an international financial institution or a foreign state namely the US, Japan, Germany, the UK, France, Italy or Canada;
- debt securities were rated not lower than “AA-“/”Aa3” by at least two reputable agencies from among Fitch Ratings and/or Standard and Poor’s and/or Moody’s and which ratings are effective on the date of purchase;
- securities are denominated in USD, JPY, EUR, GPB or CAD;
- debt securities mature within five years of the date of purchase by the Ukrainian bank; and
- debt securities may further be traded by the Ukrainian bank outside Ukraine and exclusively to non-residents of Ukraine.
NBU Regulation No. 77 dated 8 August 2017 in relation to the Eurobonds has taken effect on 10 August 2017.