Page 52 - UKRRptFeb19

also unlocks low-interest loans from the EU and World Bank. Even with this multilateral help, Ukraine will have to sell Eurobonds to cover next year’s financing needs.
Ukraine could avoid Eurobond placement in 2019 if the nation's government manages to raise enough concessional financing , Yuriy Butsa, Ukraine’s government commissioner for public debt management told Reuters on December 6.
In October, Ukraine placed a $750mn five-year tranche of sovereign Eurobonds, and a ten-year tranche of $1.25bn. The yield of the five-year tranche maturing in February, 2024 was 9% per annum, the ten-year tranche some 9.75%. The initial reference point was about 9.25% and about 10% respectively. The volume of the order book amounted to $4.9bn.
The move immediately followed an agreement between Kyiv and its main donor, the International Monetary Fund (IMF) over a new 14-month stand-by programme of $3.9bn . The programme will replace the arrangement under the Extended Fund Facility (EFF) agreed March 2015. Ukraine has received $8.4bn from the IMF so far under the multinational lender's EFF.
If Ukraine did come to the international market in 2019, Butsa expected part of any bond sale to be in euro-denominated issues. While the EU accounts for 38% of Ukraine’s trade, only 8% of its debt is denominated in euros.
"We are also looking at the possibility to do another liability management of the sort we did in 2017 because we have some bigger repayments in 2020 and 2021, so if the conditions are good we can do that next year."
Making local currency securities accessible through Clearstream, an international clearing system owned by German stock market operator Deutsche Boerse, should also increase the share of foreign investors in Ukraine’s local markets.
Kyiv-based experts expect that IMF money of about $1.4bn-$1.5bn, as well as a loan guaranteed by the World Bank of $600mn-$800mn, will be allocated by December 25. These loans, together with the expected a €500mn macro-financial assistance (MFA) tranche from the EU, will enable Ukraine to increase its gross reserves by almost $3bn in December.
52 UKRAINE Country Report February 2019 www.intellinews.com