Page 54 - UKRRptMay19

8.5 Fixed income
With outsider and comic Volodymyr Zelenskiy set to win the second round of presidential polls on April 21 the Ukraine bond rally was set to hit a floor at 8.5% yield for the dollar note due November 2028 as the elections aftermath may present new challenges while first steps of the new president will be watched out. Parliamentary elections in October will be another serious challenge for Ukraine. This may limit Ukraine Eurobond yield downside to 8% in near future. Still, on relative scale Ukraine remains cheap compared to EM peers and is the highest yielding sovereign in our CEE universe. Despite the already good yield compression our Buy recommendation remains intact due to positive market momentum.
Investments by foreigners in Ukrainian domestic treasury bills hit a new record in April, increasing by UAH2.5bn, to nearly UAH23bn, or $852mn. ICU writes: “For three weeks in a row, domestic bills have been favoured by foreign investors. It is very likely that demand from this category of investors will continue to be high during the following weeks.”
8.5.1 Fixed income - bond news
Nova Poshta, the privately owned delivery company, has successfully placed bonds for UAH300mn, or $11.2mn, Raiffeisen Bank Aval, the underwriter, tells Interfax-Ukraine. Maturing Aug. 14, 2020, the bonds have an annual yield of 22%, says Victoria Masna, head of investment banking at Raiffeisen. The money is to go to buying new trucks, new computer servers and modernizing the company’s 2,886 branches. Last year, Nova Posta delivered 174mn packages, 20% more than in 2017. As part of strategy to grow again by 20% this year, the company has opened 164 branches since
54 UKRAINE Country Report May 2019 www.intellinews.com