Ukrzaliznytsia seeks to reassure creditors it’s not facing the abyss

Oleksandr Pertsovskyi, Chairman of the Board of Ukrzaliznytsia, believes that state funding of passenger transport and indexation of freight tariffs are essential prerequisites for a successful restructuring of the company’s Eurobonds. He stated this in an interview with TSN on Monday.

Ukrzaliznytsia’s debt burden amounts to about 15% of the company’s total assets, or UAH 60.6 billion.

This debt was accumulated through the construction of major infrastructure projects, such as the Beskydy Tunnel in the Carpathians and the Darnytskyi Bridge in Kyiv. The bank loans used for these projects were refinanced several times and eventually converted into Eurobonds, which mature in 2026.

“At present, we are servicing debt taken to finance projects launched before 2012 that unfortunately brought no economic return. Now, however, we are raising capital for projects with a clear payback period. For example, we are investing in power generation to reduce electricity costs, or in new locomotives—without which freight transport would simply stop,” Pertsovskyi said.

The company’s plan is to restructure its Eurobonds by spreading payments over time, avoiding a single, unsustainable lump-sum payment next year.

According to Ukrzaliznytsia, successful restructuring is only possible if bondholders see a prospect of stable operations over the next five to ten years.

“If the company appears to be heading into an abyss, everyone will try to take their money today,” Pertsovskyi explained.

“When the state demonstrates readiness to fund passenger transport and to index freight tariffs, it creates the basis for a nuanced, complex, yet constructive dialogue with bondholders,” he added.

Ukrzaliznytsia currently has two Eurobond issues: one maturing in July 2026 and another in July 2028. In December 2022, the company restructured these obligations, securing a two-year deferral of principal repayment and rescheduling coupon payments. Following this transaction, as of January 2025, the outstanding principal amounts are $703.2 million due in 2026 and $351.9 million due in 2028.