Event Publicly Available Information:
Update: The DC Secretary has received confirmation that the conditions precedent to the resolutions passed by the EMEA DC on Friday 2 October 2015 (EMEA DC Decision 02102015) have been satisfied. Therefore, pursuant to EMEA DC Decision 02102015, the resolutions listed in EMEA DC Decision 05102015, which were published earlier today 5 October 2015 are effective. For more information, please refer to DC Credit Event webpage: http://www.cdsdeterminationscommittees.org/cds/republic-of-ukraine-6/
EMEA DC Meeting Statement 2 October 2015 (0210201502)
The EMEA DC met today to continue its discussions regarding its preparations for an accelerated Auction process if, as expected based on Ukraine’s announced plans, a Repudiation/Moratorium and/or Failure to Pay Credit Event occurred on or around 3 October 2015, in particular focusing on the applicable terms for such Auction.
In connection therewith, the EMEA DC resolved on a conditional basis, inter alia:
(a) to hold an Auction for The Republic of Ukraine on Tuesday 6 October 2015;
(b) to publish today the Credit Derivatives Auction Settlement Terms in respect of The Republic of Ukraine (the Auction Settlement Terms); and
(c) to publish today the Final List of Deliverable Obligations (the Final List),
on the strict understanding that each such resolution (and thereby the Auction Settlement Terms and the Final List) would only become effective, and therefore each such resolution would only constitute a "DC Resolution", if the EMEA DC Resolves (as more particularly described in the attached resolutions) that a Repudiation/Moratorium and/or a Failure to Pay Credit Event occurs with respect to Bond Number 1 in the Final List on or about 3 October 2015.
In relation to the above conditional resolutions, the publication of the Auction Settlement Terms and the Final List that would apply if the Auction occurred, market participants should note the following points.
Auction Settlement Terms
In comparison with the Auction Settlement Terms for the most recent EMEA DC Auction (Codere), please note that the material changes to the Auction Settlement Terms for The Republic of Ukraine include:
(i) The Auction Settlement Terms have been updated for use with the 2014 ISDA Credit Derivatives Definitions (the 2014 Definitions).
(ii) The Auction Settlement Terms have been amended to cover transactions incorporating the 2003 ISDA Credit Derivatives Definitions (as supplemented by the March 2009 Supplement or the July 2009 Supplement) ("Updated 2003 Transactions") as well as those transactions incorporating the 2014 ISDA Credit Derivatives Definitions. Whilst this change has been made for Republic of Ukraine Auction, future Auction Settlement Terms will not necessarily cover Updated 2003 Transactions.
(iii) For both Updated 2003 Transactions and 2014 Transactions to be Auction Covered Transactions, amongst other requirements, the Deliverable Obligation Provisions applicable to such transactions need to be identical to one set of the Deliverable Obligation Terms specified in Schedule 1 of the Auction Settlement Terms. This means that, for example, if an Updated 2003 Transaction or 2014 Transaction specifies "Bond or Loan" as the Deliverable Obligation Category, such transaction will not constitute an Auction Covered Transaction.
(iv) Subject to (iii) above, Updated 2003 Transactions and 2014 Transactions with a Scheduled Termination Date of 20 September 2015 are expected to constitute Auction Covered Transactions by virtue of the DC Resolution of 23 September 2015 that a Potential Repudiation/Moratorium occurred with respect to the Republic of Ukraine on 19 September 2015. Please note, however, that any such Auction Covered Transaction will not be subject to the Fixed Rate Accrual Amendments set out at Schedule 2 of the Auction Settlement Terms on the basis that the final Fixed Amount under such transaction should have been paid by Buyer on or about 20 September 2015.
Timeline and Settlement Provisions
(i) Any customer that wishes to submit a Customer Physical Settlement Request to a Participating Bidder must submit a Customer Physical Settlement Request Letter (the form of which is attached as Exhibit 2 to the Auction Settlement Terms) to the relevant Participating Bidder no later than 5:00 p.m. London time on Monday 5 October 2015.
(ii) The Physical Settlement Period for Representative Auction-Settled Transactions (i.e. transactions that are created pursuant to the Auction) ("RASTs") has been shortened to one Business Day following the Notice of Physical Settlement Date (which is Wednesday 7 October 2015). That is, settlement of all RASTs would be required to be completed on or before Thursday 8 October 2015.
(iii) Accordingly, to ensure that each Participating Bidder in a RAST settlement chain is aware of which Bonds it will receive under the Customer Buy RAST / Auction RAST in respect of which it is Seller so that it can then specify the same Bonds in the Notice of Physical Settlement that it delivers to Seller under the Auction RAST / Customer Buy RAST in the same RAST settlement chain in respect of which it is Buyer, the deadline for Buyers to deliver Notices of Physical Settlement (or NOPS Amendment Notices) has been shortened as set out below:
(a) Customer Buy RAST, 10:00 a.m. London time on Wednesday 7 October 2015;
(b) Auction RAST, 12:00 p.m. London time on Wednesday 7 October 2015; and
(c) Customer Sell RAST, 2:00 p.m. London time on Wednesday 7 October 2015.
(iv) If (a) Buyer fails to deliver an effective Notice of Physical Settlement by the relevant deadline specified above or (b) Buyer has not delivered the Bonds specified in the relevant Notice of Physical Settlement (or NOPS Amendment Notice) on or before Thursday 8 October 2015, Seller will have three Business Days to try and buy in any Bonds on the Final List (as selected by the Seller in its sole discretion), during which time Buyer’s right to deliver the Bonds specified in the relevant Notice of Physical Settlement (or NOPS Amendment Notice) will be suspended.
(v) If Seller is unable to buy in any Bonds on the Final List by the end of the initial three Business Day buy-in period, then the RAST settlement provisions revert to the normal procedures set out in Section 9.7 of the 2014 Definitions. That is, Buyer’s right to deliver the Bonds specified in the relevant Notice of Physical Settlement (or NOPS Amendment Notice) would be reinstated, subject to Seller’s ability to suspend that right once again six Business Days after the end of the initial buy-in period if Seller is of the view that he can effect a buy-in (with this process repeating after the subsequent buy-in period until final settlement of the RAST trade).
(vi) Buyers under RASTs should note that by delivering a Notice of Physical Settlement (or NOPS Amendment Notice), they are deemed to represent that (i) they hold, or have a reasonable expectation of receiving, the relevant amount of each Bond specified therein, and (ii) accordingly they will be able to deliver such amount of each such Bond on or before Thursday 8 October 2015.
(vii) Please note the following additional points in relation to these amended RAST settlement/termination provisions:
(a) Unlike the normal buy-in procedures, Seller will be able to buy in any Bonds on the Final List whereas Buyer can only deliver the Bonds specified in the relevant Notice of Physical Settlement (or NOPS Amendment Notice);
(b) In seeking buy-in offers, Seller is only under an obligation to obtain firm tradeable quotations and need not commit actually to purchase the relevant Bonds. Additionally, any buy-in offers that Seller seeks to obtain on Friday 9 October 2015 must be on the basis of same day settlement of such purchase. This is consistent with the EMEA DC’s intention of running an Auction on an expedited basis so that the ultimate recipients of Bonds delivered under RASTs may participate in Ukraine’s exchange offer and consent solicitation.
(c) If the buy-in provisions are applicable because Buyer has failed to deliver a Notice of Physical Settlement, Seller may deliver a Notice of Physical Settlement on Buyer’s behalf during the Seller’s initial three Business Day buy-in period. If Seller does not deliver a Notice of Physical Settlement and is unable to effect a buy-in within the initial 3 Business Day buy-in period, then the RAST will terminate on such third Business Day; and
(d) If all Bonds on the Final List are redeemed, exchanged or the aggregate amount thereunder is otherwise reduced to zero, in all cases prior to settlement, the RAST will terminate.
(viii) Any dealer wishing to participate in the Auction as a participating bidder should note that the cut-off time to submit a Participating Bidder Letter (a form of which is attached as Exhibit 1 to the Auction Settlement Terms and a Word version of which can be accessed at the link above) is 11:00 a.m. London time on Monday 5 October 2015. Please note the revised representations that potential Participating Bidders are to give.
(ix) If, for whatever reason, an Auction Final Price is not determined on or before Wednesday 7 October 2015, such date will constitute an Auction Cancellation Date. The consequence of this is that each Auction Covered Transaction will settle in accordance with its fallback settlement method. In accordance with Section 13(e) of the Auction Settlement Terms, ISDA, Markit and Creditex will announce the occurrence of an Auction Cancellation Date on each of their websites.
EMEA DC Statement 0210201501
Clarification statement for 19 September as date of Potential Repudiation/Moratorium:
The EMEA DC agreed to publish this clarification statement to outline its reasoning for determining the date of the Potential Repudiation/Moratorium in respect of the Republic of Ukraine as 19 September 2015 in the EMEA DC Decision 23092015 published on 23 September 2015. The EMEA DC noted that the occurrence of a Potential Repudiation/Moratorium includes, amongst other things, a declaration or imposition of a moratorium by an authorised officer of the Republic of Ukraine or a Governmental Authority with respect to one or more Obligations in an aggregate amount not less than the Default Requirement, whether de facto or de jure (Section 4.6(a)(i)(B) of the 2003 and 2014 ISDA Credit Derivatives Definitions).
As set out in a fact sheet published by the Ministry of Finance of Ukraine on 27 August 2015, the government of Ukraine stated that there would be a ’technical suspension’ of payments under certain Obligations of Ukraine during its proposed debt restructuring programme. Although this appeared to be an announcement that Ukraine would suspend its payments under such Obligations, the EMEA DC felt that the proper construction of the announcement was that any such suspension was conditional on the debt restructuring programme proceeding. Accordingly, when Ukraine promulgated the legislation pursuant to which the Cabinet of Ministers of Ukraine were instructed to procure the restructuring of certain Obligations of Ukraine, at that point the DC were of the view that such suspension of payments ceased to be conditional and that such official promulgation constituted a de facto declaration of a moratorium by an authorised officer or Governmental Authority with respect to one or more Obligations in an aggregate amount not less than the Default Requirement.
Ukrainian counsel advised the DC that the relevant legislation was officially promulgated on 19 September 2015.
In accordance with the EMEA DC Meeting Statement published on 30 September 2015 (see below) and as part of the preparations for a potential expedited Auction process, please see above links to a Supplemental List of Deliverable Obligations and a draft of the Republic of Ukraine Auction Settlement Terms.
EMEA DC Meeting Statement 30 September 2015
The EMEA DC met today to discuss holding a potential Auction in respect of the Republic of Ukraine on 6th October 2015, it being understood that such Auction would only take place if a Repudiation/Moratorium Credit Event and/or a Failure to Pay Credit Event occurred on or around 3rd October 2015 in line with the Republic of Ukraine’s announced plans. If an Auction is required, the EMEA DC agreed to effect an accelerated Auction process in accordance with the DC Rules.
Accordingly, the EMEA DC agreed to publish an Initial List of Deliverable Obligations, which can be accessed via the link above. Eligible Market Participants are invited to submit as soon as possible (and in any event no later than 5.00pm (London time) on Thursday 1st October 2015), any additional obligations not on the Initial List to be considered for inclusion on the Final List. Proposed obligations (with the required documentation) may be submitted by sending an email with all information required by the DC Rules to the following email address: firstname.lastname@example.org. Please note that the Deliverable Obligation Category for the Standard Emerging European and Middle Eastern Sovereign Transaction Type is Bond only.
The DC Secretary will publish the Supplemental List on its website at or about 7.00pm (London time) on Thursday 1st October 2015. Eligible Market Participants are invited to submit any challenges to the Supplemental List as soon as possible (and in any event no later than 5.00pm (London time) on Friday 2nd October 2015). Subject to any valid challenges, the DC Secretary will publish the Final List on its website at or about 7.00pm (London time) on Friday 2nd October 2015. A draft of the Republic of Ukraine Auction Settlement Terms is expected to be published on the DC website on or before Friday 2nd October 2015.
Please note that any bonds already tendered in the exchange offer and consent solicitation on behalf of the Republic of Ukraine and the Special Enterprise Financing Infrastructure Project will not be capable of being Delivered into the Auction in settlement of Representative Auction Settled Transactions. Any bondholders using custodians and intending to Deliver bonds into the Auction or to take Delivery of bonds, in each case in settlement of Representative Auction Settled Transactions are advised to liaise with their custodians promptly, to ensure ultimate recipients of bonds pursuant to the Auction may participate in the exchange offer and consent solicitation.
Please further note that the EMEA DC is taking these preparatory steps so that (i) an Auction can be held and (ii) Representative Auction Settled Transactions can be settled, in each case prior to the deadline set by the Republic of Ukraine for bondholders to participate in the exchange offer and consent solicitation.
We ask market participants to continue reviewing regularly the ongoing statements and resolutions and publication of documentation by the EMEA DC in relation to the Republic of Ukraine for updates on the timing of items relating to the Auction process.
The EMEA DC agreed to reconvene at 12.00pm (London time) on Friday 2nd October to continue discussions on the expedited Auction process outlined above.
Please refer to EMEA DC Statement 28092015 for information on a potential Auction on an expedited basis if a Repudiation/Moratorium Credit Event occurred with respect to the Republic of Ukraine and a preliminary list of potential Deliverable Obligations.
25 September 2015: The DC met today and will reconvene at 5pm (London time) today to continue discussions on whether to prepare for an expedited auction settlement process in the event a Repudiation/Moratorium Credit Event occurs in respect of the Republic of Ukraine.
23 September 2015: The DC further agreed to reconvene on Friday 25 September 2015 to discuss the possibility of having an expedited auction settlement process in the event that a Repudiation/Moratorium Credit Event occurs in respect of the Republic of Ukraine as a result of the standstill mentioned in the Potential Repudiation/Moratorium event.
23 September 2015: The DC met on Wednesday, 23 September 2015 to continue discussing the DC question and resolved that a Potential Repudiation/Moratorium had occurred with respect to the Republic of Ukraine and the date of the occurrence of such Potential Repudiation/Moratorium is 19 September 2015.
22 September 2015: The EMEA DC met on Tuesday, 22 September 2015 to discuss the DC question and agreed to reconvene on Wednesday, 23 September 2015 to allow further time to collate information for this question.
|Request Accepted by DC|
|Pending DC Consent|