SUEK calls force majeure: bank and bond investor implications?

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Just a month after its inaugural US dollar bond deal, coal mine SUEK is calling a force majeure.

Bookrunning banks should engage their clients on this potential situation. We invite lead managers/bookrunners/syndicate banks Bank of America, Citigroup and Commerzbank to inform investors in the recent SUEK bond issuance to inform them that SUEK has called a force majeure on its operations in the Far East port of Vanino following a fire, as we believe this is relevant information for investors.

Official sources on holders are uninformative as the bonds are quite recently issued. The only indication so far is that Van Eck and BlackRock hold small “passive” positions in them. Vanino is the second largest coal export port in the Russian Far East and SUEK has transmitted 12.7mn tonnes of coal through it in the first nine months of 2021.

Given high coal prices, if SUEK has committed to deliver coal to clients in Asia that now possibly will not get their shipments, certain liabilities/economic exposures could arise due to failure to deliver. This may also be the very reason SUEK has called a force majeure.

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