NBU provides further relief for Ukrainian corporate issuers to repay Eurobonds obligations

With effect from 21 December 2024, the National Bank of Ukraine (“NBU”) introduced new exemptions from the moratorium on foreign currency cross-border transfers. Notably, these changes broaden the scope of existing exemption for Ukrainian corporate issuers permitting to make payments in connection with Eurobond-related obligations, described in our earlier legal alert, and now encompass Loan Participation Note (LPN) structures.

The NBU allowed Ukrainian companies to repatriate dividends to their foreign participants/shareholders, subject to the following conditions:

• the Ukrainian company is the borrower under a loan agreement with a foreign Eurobonds issuer;
• a loan from the foreign issuer to the Ukrainian company was funded from Eurobonds issuance proceeds;
• Eurobonds are admitted to trading on a foreign stock exchange and are in circulation as of 10 July 2024;
• the foreign currency transfer for dividends repatriation is limited to the amount of coupon payments on Eurobonds that have already been made to the bondholders during the period from 24 February 2022 until 30 April 2024, minus any foreign currency transfers made by the Ukrainian company from its Ukrainian bank account to the foreign Eurobonds issuer for purposes of interest payments under the loan agreement since 4 May 2024;
• payments must be made exclusively with the Ukrainian company’s own foreign currency funds;
• no export transactions of the Ukrainian company remain subject to currency control monitoring as a result of such Ukrainian company’s failure to comply with maximum settlement deadlines that have passed within the last 12 calendar months; and
• the Ukrainian company must provide the servicing bank with all necessary supporting documents and information to evidence compliance with the above requirements.

Concurrently, the NBU also enacted other exemptions, such as lifting the ban on the sale and purchase of banking metals without physical delivery using non-cash UAH. Such exemption applies to Ukrainian businesses in the jewelry production field that started their operations before 23 February 2022.

Additional notes

This LEGAL ALERT is issued to inform AVELLUM clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The information above does not constitute legal or other advice and should not be considered a substitute for specific advice in individual cases.

For further information on this legal alert and other issues regarding currency control restrictions, please contact our Senior Partner, Glib Bondar.