The ongoing Russian invasion of Ukraine has provided market uncertainty we haven’t seen in some time. For most stocks, this uncertainty has resulted in weak price action. However, specific companies with exposure to this conflict are rebounding today. One stock we’re watching closely is VEON (NASDAQ:VEON). Currently, VEON stock has surged more than 40% higher.
VEON is certainly a unique company that has recently come on the radar of many investors. Though NEON is based in the Netherlands, the telecommunications company does have exposure to Ukraine. Accordingly, following the invasion of Ukraine, shares of VEON stock plunged from around $1.50 per share to as low as 24 cents. Today’s surge has brought VEON stock back to the 75-cent range as the company made a key announcement.
Let’s dive into the announcement that is taking investors in VEON on a nice ride today.
VEON Stock Surges on Bond-Related Announcement
Today, VEON put forward a press release reiterating a currency election option on the company’s ruble-denominated notes.
There are many risks investors face when it comes to holding specific bonds. For corporate bonds, there is always the risk of default via bankruptcy or other business risk. There’s interest rate risk, as well as inflation and credit rating-related risk.
However, in this case, currency risk is the key attribute that investors are focusing on.
Some of VEON’s notes are denominated in Russian rubles. Given the currency depreciation of late, investors may have been concerned they would be on the hook for changes in the ruble-dollar exchange rate.
However, the company reiterated that:
“As a result of this currency exchange option being applicable, holders of the Notes may, through the notification procedures of Euroclear and/or Clearstream on or before the tenth business day prior to an interest or principal payment date, give an irrevocable notice of election to Citibank, N.A., London Branch as principal paying agent to receive payments of interest or principal, as the case may be, in U.S. dollars.”
What this means in layman’s terms is that interest payments can be received in the form of U.S. dollars by investors concerned about currency risk. This has increased the value of the company’s bonds and provided a boost to VEON’s equity valuation as well. In the coming months, this will certainly be a stock to watch.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
