Page 24 - BNE_magazine_bne_September 2019

24 I Companies & Markets bne September 2019
bne:Funds
Ukraine Railway
gets a $500mn
Eurobond away
on second attempt
bne IntelliNews
Ukrainian Railway tried to issue a Eurobond in September 2018 but the market was unreceptive.
This time round the market welcomed the $500mn offer.
Ukrzaliznytsia (Ukrainian Railway) followed the government into the international debt capital market with a $500mn Eurobond issued to high demand on June 2.
This was the second time the state-owned rail monopoly tried to get a Eurobond away that it intends to use to modernise its services. Ukrzaliznytsia issued a five-year note with a yield of 8.25%, Interfax Ukraine reported, citing market participants.
"More than 175 investors from the UK, continental Europe, the United States and Asia presented their offers to purchase the securities. Consequently, the demand was five times higher than the offer and reached $2.5bn," Yevhen Kravtsov, the chairman of the company's board, said on Facebook.
Kravtsov said that the fixed rate is more than 1.5 percentage points lower than the coupon on the existing issue of 2013.
The placement was organised by JP Morgan and local investment bank Dragon Capital. The road show in the UK and continental Europe started on June 26 and Ministry of Finance officials reported they were met with enthusiasm.
Ukrainian Railway became the first corporate Ukrainian issuer to follow the government’s transaction two weeks ago.
The government issued a €1bn seven-year Eurobond on June 14 that yielded 6.75% – below the 7% the bond was expected to cost before the issue – that was the first euro-denominated Eurobond issue in seven years. All Ukraine’s sovereign bonds have rallied recently with the spreads on the benchmark US treasury bills tightening by some 100 basis points this year, say analysts.
“Follows hugely successful sovereign issue in euros a few weeks back. Since issuance that bond has rallied over 6.5 points, and the whole Ukraine sovereign curve has tightened well over 100bps,” Tim Ash, senior sovereign strategist at BlueBay Asset Management, said in a note. “Mid-May Ukraine 10Y in dollars was trading at 9.5%, and its now down at 7.7%, a massive reduction in Ukraine's cost of borrowing overseas – some of this is the broader risk-on market rally, but only around 50bps of this, the rest is I think appreciation finally of the Ukraine story (better ratios now than peers), optimism over the Zelenskiy presidency, et al.”
International bond traders are hot for Ukrainian fixed income at the moment. In the five weeks since the Ukrainian domestic fixed income market was hooked up to the global financial system after it joined Clearstream, non-residents have invested over $2bn into hryvnia-denominated bonds and already own more than 7% of the outstanding bills, up from next to nothing a year ago.
Russian issuers place $7bn Eurobonds in 1H19, almost beat 2018
bne IntelliNews
Russian corporate issuers placed $6.9bn worth of Eurobonds in 14 deals in January-June 2019, almost as much as $7.8bn in 18 issues placed in 2018 overall, Vedomosti daily said on July 31 citing a study by PwC. The
www.bne.eu
average issue size is up to $494mn versus $460mn in 2018. However, Russian issuers still lag behind the 2017 results, when a total of $20.6bn in Eurobonds was placed in 41 issues averaging $503mn.