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S&P last upgraded Ukraine’s rating from Caa2 (positive) in August 2017. The rating nadir was Ca (negative) awarded in March 2015 following the Maidan events. Its zenith was B1 (positive) awarded in August 2008 at the apex of the region-wide boom.
8.5 Fixed income
Two years after Ukraine started to cooperate with Clearstream, external investment in government bonds has doubled, the share of public debt in national currency has increased to 39%, and 5-year bonds have won acceptance, the Finance Ministry reports. In a press conference last week with representatives of the Luxembourg-based international depository, Ministry officials said external investors now hold UAH 98.3 billion, or $3.6 billion, in Ukraine government bonds.
The value of Ukraine’s GDP warrants soared to a fair value of 262 cents,
according to to the fair value assessment of US investment bank JP Morgan – almost three times their previous value. The GDP warrants issued some five years as part of a debt restructuring deal following the economic crisis caused by the 2014 Revolution of Dignity have begun to pay out and the amount their pay is linked to GDP growth. Ukraine made it first payment – $41mn – for GDP warrants issued as part of the public debt restructuring in 2015 on May 31. The trigger for the repayment was Ukraine’s GDP growth hitting 3.2% in 2019, above the 3% threshold, after which payments have to be made. Ukraine is liable for paying on these warrants up until 2040. However, if GDP growth gets over 4% the warrants become very expensive and could cost the states billions of dollars. The Finance Ministry bought back $330mn of the warrants, about 11% of the outstanding total, but the cash strapped government cannot afford to retire more.
54 UKRAINE Country Report July 2021 www.intellinews.com