Straddling both Ukraine and Cyprus, agricultural production company UkrLandFarming PLC is selling a debut dollar bond Tuesday, March 19 despite analyst concerns over Ukrainian and Russian companies' use of the Cypriot banking system as a transaction hub.
Cyprus's government is scrambling for support of a controversial draft bill that will tax deposits as part of an international 10 billion euro ($12.93 billion) bailout, forcing banks to possibly remain closed for longer than planned, while raising less revenue from a controversial deposit tax than required for the bailout.
Market watchers said demand could still be strong if the company can offer a yield sufficiently attractive for investors to take the risk.
Junk-rated UkrLandFarming, headquartered in Cyprus and with operations in Ukraine, is selling a dollar benchmark-sized, five-year bond, that is expected to yield in the high 10%.
With limited new corporate bond issuance in the European market this week, the spotlight has fallen on UkrLandFarming's debt sale amid analyst concerns on what the fallout from Cyprus means for Russian and Ukrainian companies doing business in Cyprus. Some Russian and Ukrainian companies headquarter in Cyprus due to a more favorable tax environment than they could find at home.
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