Page 2 - bne_newspaper_April_19_2019

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April 19, 2019 www.intellinews.com I Page 2
Ukraine’s bond market revolution about to begin, just as debt repayments are about to soar
considerably to $16.1bn this year, according to JP Morgan, followed by $12.8bn in 2020, $13.8bn in 2021, $14.7bn in 2022 and $15.2bn in 2023.
It’s going to be tight, but assuming a receptive international capital market and a moderate expansion of the domestic capital market Ukraine should be able to cope with the increase. Indeed, Ukraine seems to be in luck, as after the US Federal Reserve bank made it clear it was not going to continue its tightening of monetary policy a window has opened for emerging markets bond issuers into which issuers have rushed: emerging European companies and governments have already issued a total of $27.3bn of debt in the first quarter and bond traders' appetite is not yet sated.
In April Ukraine is due to be hooked up to the Clearstream international payment and settlement system that will plug its financial market directly into the global capital market system. That means bond traders can buy and sell Ukraine’s local sovereign bonds from the comfort of their dealing desks in London and New York, without having to go through expensive local brokers.
When Russia made the same reform in 2012 it transformed the local capital market as some $20bn of foreign money flooded the market, providing an essential source of fresh capital to finance the Russian budget. Even with last year’s sell off foreign investors still hold some 30% of all the outstanding ruble denominated OFZ treasury bonds, and those have been selling like hot cakes in the last two months thanks to a return of “risk- on” sentiment amongst international investors following the signals from the Fed.
Russian Market Data Value
1M YTD
Equity Indices
RTSI
1,266
6%
18%
MOEX
2,568
4%
8%
MSCI EM
1,096
4%
14%
S&P
2,900
3%
17%
NASDAQ
7,996
4%
21%
DAX
12,153
4%
15%
FTSE
7,471
3%
11%
Commodities
Price, $
1M YTD
Brent
71.6
7%
32%
WTI
63.8
9%
40%
Urals
74.2
-4%
65%
Gold
1,274
-2%
-1%
Silver
15.0
-2%
-3%
Nickel
12,950
1%
22%
Copper
6,508
2%
9%
Aluminum
1,840
-1%
-2%
FOREX
Value
Russia sectors performance % YTD
1M YTD
EUR/RUB
72.08
-2%
-9%
Russia sectors performance % YTD
Oil & Gas Utilities Financials Consumers Telecoms M&M RTS MOEX
13
19
22
18.4
12
8.3
0 5 10 15 20 25
14
16
Source: MOEX, BCS GM
source: MOEX, BCS GM
Sectors: % return YTD