Page 14 - UKRRptMay19

The Ministry of Finance tells bne IntelliNews that in 2019 its borrowing plan is $11.6bn, which includes $6.9bn of domestic debt issuances, $4.2bn of external borrowings, both commercial and concessional, and $0.6bn of privatization proceeds.
From $4.2bn of external borrowings Ukraine has already received €529mn loan arranged and provided by Deutsche Bank under the Policy Based Guarantee from the World bank and a $350m tap from the outstanding $1.25bn 9.75% notes maturing in 2028. There is another €500mn of EU MFA program money anticipated in the first half of this year and there are ongoing negotiations on providing concessional financing from the other official lenders. On domestic market $4bn out of $6.9bn planned borrowing has already been taken in.
“During this year, the Ministry is focused on maximizing funding from official lenders. The decision on the placement of government Eurobonds will be based on the market conditions and the residual amount of required financing,” Alla Danylchuk, head of investor relations at the ministry said.
Taken all together then Ukraine could raise over $19bn this year (if you include the $6.9bn of UAH domestic borrowing in the total) and just the donor and Eurobond issues in foreign exchange will just about cover the $16.1bn needed to refinance Ukraine's obligations this year.
Closing the gap
The Clearstream deal could make life even easier and the Ministry of Finance is getting ready to entice more investors into the local market with a revamped website, slick presentations and a “how to access UAH domestic government bonds market?” guide on the ministry website.
In the current borrowing plan 67% is in foreign currency but the state wants to expand the amount it borrows in local currency to reduce the FX risks and diversify the investor base.
Today 48.5% of the total domestic bond portfolio is held by domestic banks, followed by the National Bank of Ukraine (NBU) with 44.5%. Foreign investors account for a tiny 3.3% of the total, but that is already up from nothing two years ago. Last year the share of foreign investors' holdings went up 600% to the current total of $512mn in the first quarter and UAH19.5bn as of April 1, 2019.
And with the advent of Clearstream it will grow more. In the first two years after Russia opened its bond market to the outside world foreign investors sunk over $20bn into Russian fixed income instruments. If Ukraine follows a similar trajectory then foreigners could invest up to $4bn into Ukraine’s domestic market in the next two years, which will allow it to comfortably meet all its obligations over the next five years.
2.6 Russia imposes sweeping trade restrictions on Ukraine
A ban on crude oil exports – and restrictions on gasoline and other petrol products – were among the trade restrictions imposed by Russia against Ukraine as of June 1, the Interfax-Ukraine news agency reported. Import restrictions were also extended to machinery, textiles, and processed metals, which was estimated by the Russian government to have amounted to $250mn last year.
The sweeping April 18 trade restrictions – imposed in a government resolution – also included restricted coal and coke exports to Ukraine and a ban on pipe
14 UKRAINE Country Report May 2019 www.intellinews.com