A promissory note is a debt security embodying an unconditional obligation of the issuer to pay a fixed sum on a fixed date. Despite the simple legal construction, notes are among the most demanding securities to value: market value can range from close to face value down to a few percent of it, and everything turns on the solvency of the obligor. An independent valuation answers the holder's central question — what is this paper actually worth today?
The Kanzas company values promissory notes and bills of exchange in Ukraine for transactions, collateral, financial reporting, litigation and inheritance — as individual instruments or within debt portfolios.
What we value
- promissory notes (single-name paper);
- bills of exchange (drafts);
- bank-avalised notes;
- notes within securities and debt portfolios;
- overdue and protested notes.
For bonds, shares or mixed securities portfolios, see the dedicated pages; for debts not embodied in notes, see valuation of receivables.
When a note valuation is required
- purchase or sale of a note or note portfolio;
- pledging notes as loan collateral;
- contribution to charter capital;
- accounting recognition, revaluation and write-off;
- litigation: enforcement, contestation, issuer insolvency;
- inheritance and notarial procedures;
- liquidation of the holding entity.
What drives the value of a note
The first and dominant factor is the financial condition of the issuer (for a bill of exchange, the drawee): the valuer analyses its financial statements, payment discipline and signs of insolvency. The second is an aval: a note avalised by a sound bank approaches risk-free debt in value, since the credit quality of the avalist takes over. The third is the legal quality of the instrument itself: notes are subject to strict formal requirements, and a defect of form strips the document of its status as a note, with drastic consequences for enforceability and value. Time to payment, currency, protest status and recovery prospects are also taken into account.
Valuation methodology
Note values are derived under the income approach: the expected recovery is discounted to the valuation date at a rate reflecting market yields and the obligor's credit risk. For overdue notes, the valuer assesses the probability and timing of actual recovery, including the litigation outlook — such paper may be worth only a fraction of face value. The comparative approach plays a limited role given the non-public nature of note circulation, but transactions in debt instruments of comparable quality are used to cross-check results.
How the engagement is carried out
After the purpose and scope are agreed and the contract signed, the valuer inspects the original instrument, verifies formal validity and the continuity of endorsements, analyses the obligors' financial condition, performs the calculations and issues a valuation report that is fully valid for notaries, banks, courts and state authorities in Ukraine. Key documents include the original note, the underlying contracts, the issuer's financial statements where available, aval details and any protest deeds, court decisions or enforcement records.
Our experience
The Kanzas company has been valuing securities and debt instruments for more than 20 years. Within our cooperation with the Deposit Guarantee Fund of Ukraine in 2015–2020, we revalued the assets of insolvent banks — portfolios of securities and rights of claim, including distressed debt instruments. That practice is the best possible school for debt valuation: we know how to determine the real value of obligations even when recovery is in doubt. Our team includes appraisers holding international valuation certificates.
Questions and answers
What is an overdue note worth? It depends on the issuer's solvency and the litigation outlook: anywhere from a substantial share of face value to a nominal amount. Establishing exactly that is what the valuation does.
What is a defect of form and how does it affect value? The absence of any mandatory element deprives the document of its legal force as a note — it may then rank only as an ordinary debt acknowledgement. This fundamentally changes both enforceability and value, which is why legal verification of the instrument is an integral part of the valuation.
Does a bank aval increase a note's value? Yes, materially: an avalised note is backed by the bank's obligation, so its value is driven by the avalist's credit quality rather than the issuer's alone.
How long is the valuation report valid? As a general rule, six months from the valuation date, unless specific legislation provides otherwise.
We value your time: standard note valuations are completed within a few business days, and complex distressed cases receive careful individual attention. To discuss your project, email us or message us via your preferred messenger.
