Page 55 - UKRRptJul21

8.5.1 Fixed income - bond news
Attracted by high interest rates, international investors increased their investment in Ukrainian government bonds by $377mn this in June, prompting the central bank to buy $415mn. Despite the purchases, Ukraine’s currency strengthened to less than 27 to the dollar for the first time in almost a year.
Although down 24% from the February 2020 peak, this current investment accounts for almost 10% of the bonds in circulation. Ministry officials say that foreign investment contributed to the sharp decrease in weighted average yield on hryvnia bonds - from 18.7% in January-May 2019 to 11.2% in January-May 2021.
Ukravtodor, in its debut placement on the Eurobond market, placed $700 million of 7-year bonds at 6.25%, well below the initial return target of 6.625%, Interfax-Ukraine reported yesterday. Earlier this year, the Cabinet of Ministers approved sovereign bond guarantees up to $740 million for the state highway agency. The organizers of the issue were J.P. Morgan, Dragon Capital, and Ukreximbank.sUkravtodor’s Eurobonds, offered under sovereign guarantees, were three times oversubscribed last week, Infrastructure Minister Oleksandr Kubrakov writes on Facebook. Ukravtodor received applications for nearly $2.4bn and placed $700mn. With the yield on the 7-year bonds priced at 6.25%, the “Big Construction” bonds “received a historically low rate compared to previous Ukrainian sovereign placements in US dollars,” he wrote. Dragon Capital, a joint lead manager with JP Morgan, said bids came from about 140 investors – UK – 41%; US – 28%; and Europe – 28%.
Ukraine’s largest steelmaker Metinvestwill buy $115.9mn in principal amount of its 2023 notes outstanding, according to its June 25 regulatory announcement. The purchase price will be 107.3% of par (plus accrued interest), and the principal amount of METINV’23 notes outstanding after Metinvest’s purchase will be $195.3mn, the announcement said, adding that the settlement date for the tender will be on or about June 29. Recall, on June 17 Metinvest announced a tender for its METINV’23 notes, intending to purchase up to $150mn via a modified Dutch auction with 107.3% of par (plus accrued interest) as the minimum price. METINV’23 notes continue to look attractive to their holders, which was the reason the noteholders were willing to offer only about 37% of the outstanding amount of the notes for Metinvest’s purchase, we think. METINV’23 notes will likely be excluded from JPMorgan’s CEMBI Broad and CEMBI Broad Diversified indices because the amount outstanding will drop below $300mn after the tender is completed.
55 UKRAINE Country Report July 2021 www.intellinews.com