Page 57 - UKRRptNov19

Moody’s rates Ukraine at Caa1 with stable outlook on its foreign currency debt. The local debt is also rated at Caa1. Moody’s last upgraded Ukraine from Caa2 (Positive) in August 2017 as the country emerged from an economic meltdown that year. The lowest rating the country had was Ca (Negative) in March 2015 in the wake of the Euromaidan protests that ousted president Viktor Yanukovych. The highest the country has scored was B1 (positive) in August 2008 as the entire region boomed before the global financial crisis struck that autumn.
Fitch Ratings upgraded the long-term issuer default rating of Ukrainian sunflower oil producer and grain trader Kernel to BB- from B+ with a Stable outlook, the agency reported on Sept. 30. The rating upgrade was based on expectations of a high share of export profits and improving macroeconomic stability in Ukraine, the agency said.
S&P affirms B long-term rating, Stable outlook for Kernel. S&P Global Ratings affirmed on Sept. 30 the long-term credit rating of Ukrainian sunflower oil producer and grain trader Kernel (KER PW, KERPW) at B with a Stable outlook. It also assigned a B rating to the company's planned Eurobond issue. The company’s rating affirmation was based on its stable operating performance during FY2019 and was in line with agency’s base case. Kernel will have executed large capital expenditures during the next 12 months, in the agency's view. And Kernel’s FOCF will remain negative (about $160-180mn) in FY2020, while its FOCF will return to positive values by the end of FY2021, the agency said. Also, S&P anticipates that Kernel’s adjusted debt to EBITDA ratio will be close to 4.0x in FY2020. The agency said it is unlikely to consider a rating upgrade during the next 12 months, unless the company’s FOCF returns to positive and adjusted debt to EBITDA ratio will be closer to 3.0x.
8.5 Fixed income
Strong foreign investor demand for 3-year hryvnia T-bills allowed the Finance Ministry to slash yields to 15.06%, down from 15.42% two weeks earlier. At October’s weekly auction, demand for three-year local currency bonds was double the supply. Concorde Capital’s Evgeniya Akhtyrko writes: “Apparently, the offer of 3Y bonds drew non-resident investors back to Ukraine’s primary local bond market despite a significant cut in interest rates.”
Here's a reminder of how Ukraine's bonds looked in different IMF programmes before and after their approval: 4 out of 5 led to spread contraction and lower borrowing costs. (2014 was a war effect.)
57 UKRAINE Country Report November 2019 www.intellinews.com