Page 54 - UKRRptOct19

an arson attack she blamed on oligarch Ihor Kolomoisky. Then in the next days a huge scandal erupted during the president’s trip to the UN General Assembly in New York following the release of a transcript of a call he had with US president Donald Trump. To top it all off a team from​ ​the International Monetary Fund (IMF) left Kyiv without securing a new Extended Fund Facility (EFF) deal​.
While the Ukrainian economy is doing nicely and has recently been upgraded by both international ratings agency Standard & Poor’s (S&P) and Fitch, the scandals have thrown into sharp relief there are still serious political risks.
Investor’s appetite has also been damped as the Ministry of Finance is offering longer term bonds, is winding down its foreign exchange bond issues and is squeezing yields lower as it has almost completed its borrowing programme for the year.
After growing rapidly all year the share of foreigner holding local bonds suddenly plateaued out in August and remained there for two months, before a one off jump up to 12% in the last week of September.
“Such a dramatic drop in receipts from the weekly bond auction comes as a big surprise. Apparently, non-residents, who have been generating a substantial share of auction receipts in recent months, were not interested in buying local bonds with terms of maturity of up to two years. Recall, most of the UAH auction receipts in recent months came from the sale of 3Y and 5Y bonds,” Evgeniya Akhtyrko of Concorde Capital said in a note. “These results show that the situation at the primary bond market is very shaky, which might undermine the government's confidence in its current course of quick interest rate cuts. Moreover, the government might face difficulty with financing the budget deficit if auction receipts remain low.”
54​ UKRAINE Country Report​ October 2019 ​ ​www.intellinews.com