Metinvest, one of the largest ferrous metals holding companies in the Ukraine, has mandated ABN Amro, BNP Paribas, Deutsche Bank and ING to arrange a US$1.5bn loan facility.

The facility carries a five-year tenor and pays a margin of 170 basis points over Libor. It will be used to finance exports, modernise operations and restructure existing debt. Syndication is expected to launch imminently.

Since the Orange Revolution of 2004, investor interest in the Ukraine has been on the increase, with estimates suggesting that Ukrainian companies have raised about US$10bn through credit lines, Eurobonds and stock listings during the last three years.

This facility is around three times the size of previous facilities secured by Ukrainian firms, and could signal a further acceleration in investor confidence, and increase the appeal of other Ukrainian companies tapping the syndicated loans market.

There have, however, been concerns that pricing in the Ukraine markets may be echoing the downward spiral in pricing seen in the Russian markets.

Yet, those working close to the deal argue that the Metinvest deal doesn’t directly represent the wider Ukrainian market, where the margins remain high.

David Hague, director, global commodity finance at ABN Amro says: “There is a shortage of high quality issuers in the Ukrainian market. Of course, large blue chip fully integrated Ukrainian corporates would rank themselves alongside their Russian peers in terms of pricing. A Ukrainian borrower will pay a rate appropriate to its significance, size and level of transparency. The margins on the Metinvest transaction reflect the creditworthiness of the company.”

He adds, “The size and pricing of the Metinvest deal are not necessarily symptomatic of wider trends in the Ukrainian market. With fewer blue chip borrowers in the market, deals are very issuer specific.”

To contrast the range of margins in the country, a Barclays Capital arranged transaction for the Ukrainian state-owned railway company Ukrzaliznytsia recently closed at US$500mn, paying a margin of 250bp. This transaction carried a three year tenor, and was the borrower’s first venture into the syndications market. The borrower originally approached the market with a US$300mn request, but opted to take the oversubscription.

Metinvest is owned by Ukraine’s richest tycoon Rinat Akhmetov, and it controls a fifth of the steel market in the Ukraine. Other assets in the Akmetov empire fall under the management of a holding company called System Capital Management, and include telecommunications companies and food producers.