Page 39 - UKRRptJul21

state-guaranteed bond with ultimate maturity in June 2028 and repayable in four equal semi-annual tranches starting December 2026, was issued at par price with a coupon rate of 6.25%, or 56 bps over the sovereign curve. Ukravtodor has become among the biggest state entities in terms of funds spending (UAH97.3bn spent in 2020, including UAH68.8bn of state budget money) and a flagship entity participating in “big construction” project promoted by president Zelesnky. The entity is a division of the Infrastructure Ministry. As Ukravtodor is a part of Ukraine’s government and the bonds have a state guarantee, the risk of this bond is identical to the sovereign one. The only additional risk for this bond is that its issuer, controlling large outlays for infrastructure spending, could be a subject of various corruption scandals. Such reputation risk on the part of the issuer, however, won’t affect its ability to service the bond. For that reason, the UKRAVT bond looks like a more attractive alternative to Ukraine’s sovereign bonds maturing in 2027-2028.
6.1.4 Budget dynamics - privatization
With ‘large scale privatizations’ only unblocked in May, the sales schedule for this year is as follows: United Mining and Chemical Company in August; Azov Shipyard in September; Bolshevik site in October; Hotel President in November, and by December two small Black Sea ports - Belgorod-Dnister and Ust-Dunaisk.
Privatization receipts will increase fourfold this, reaching $450 million,
said Kyrylo Tymoshenko, the Deputy Chief of Presidential staff, predicted yesterday at a government forum “Ukraine 30. Economy Without Oligarchs.” Starting prices for three big government corporation sales are: United Mining and Chemical Company, the titanium producer: $138 million; Kyiv’s Bolshevik plant: $50 million; and Kyiv’s President Hotel: $12 million.
Since last fall, the sale of distilleries has netted the government $55 million. The Property Fund aims to sell 900 state properties this year, most of them are considered ‘small’ or under $10 million in value. To generate more grass roots support, the Rada is considering a bill to channel 10% of proceeds of auctions to local communities, said Dmitry Sennychenko, Director of the Property Fund.
Next year, Centrenergo, the conglomerate of 23 regional power producers, will go on sale in March 2022. Odesa Port Plant, the chemical producer, is to go on sale in April 2022.
Ukraine sells its first prison to private investor for $13mn. The former prison #48 in Lviv was sold on an online auction on June 3, as the state tries to ramp up its privatisation programme.
The former state prison was abandoned in 2018 because of extremely poor conditions. The 39,800-square-meter prison is located on 32 acres of land and initially offered for $4.8mnm but stiff bidden between seven potential buyers tripled the final price.
The sale inaugurated the country’s ‘Big Sale of Prisons’ program announced by Justice Minister Denis Malyuska last August.
The winning bid was from a Lviv-based architectural company Development Engineering Service that intends to convert the property
39 UKRAINE Country Report July 2021 www.intellinews.com