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applications coming in through the new Diya, or Action, portal, the government plans to make all payments by this Thursday. Each payment is UAH8,000, or $283.
6.1.3 Budget dynamics - funding
Ukraine’s Ministry of Finance raised $600mn with a Eurobond issue in mid December tapping the enthusiasm for EM debt. Borrowing costs fell 200bp in November on the back of rapidly improving sentiment. Ukraine’s offering of dollar Eurobonds was three times oversubscribed, causing the Finance Ministry to raise the final volume by 20%, to $600mn, and to push the rate down to 6.2%, one full percentage point below the yield for a similar 12-year issue last July. “The estimated yield of 6.20% is the lowest yield on public Eurobonds in US dollars in the history of Ukraine,” Finance Minister Serhiy Marchenko said in a statement posted on the ministry website.
Five months ago, the government placed 13-year Eurobonds for $2bn with a coupon of 7.253%. JP Morgan, Paribas and Goldman Sachs were the organizers of Friday’s placement. The offering started the day with a yield guidance of 6.4% for $500mn.
Americans bought half of Ukraine’s $600mn Eurobond placement that settled in mid-December, reported the Finance Ministry. The breakdown was: US –52%; UK – 37%; and EU – 10%. The breakdown of institutions was: asset management funds - 85%; hedge funds -13%; and pension and insurance funds -- 2%. Demand was so strong on December 11 that the Ministry raised the amount offered by 20% and brought the yield down to 6.2%, a record low for Ukraine. Yields for comparable government bonds in US, UK and EU are around 1%.
Ukraine attracted a 6-month loan from Deutsche Bank of up to $350mn,
the Cabinet of Ministers resolved on December 23. The move to take a bridge loan indicates that the government only expects to get a second tranche from last summer’s IMF agreement by the end of May. The IMF tranche is to be for $700mn. The Cabinet’s resolution authorizes a loan at LIBOR + 5.75%, or almost 6%. By contrast, at the Finance Ministry’s weekly auction on Tuesday, investors bought $138.5mn worth of 1-year government dollar bonds at 3.8%.
The EBRD’s new loans to Ukraine projects will hit €750-850mn in 2020, a ‘big increase’ over the average of the last four years, Matteo Patrone, EBRD managing director for Eastern Europe and the Caucasus, told the UkraineInvest conference Friday. Separately, the European Investment Bank is extending €1bn in loans to Ukraine, making it the main loan recipient from the Bank in the ‘Eastern Neighborhood’, EU’s designation for 26 nations surrounding the EU.
The EU and the European Investment Bank extended a total of €1.24bn euros in aid and loans to Ukraine on December 17. Coming without a public signal from the IMF, the aid is seen as helping the Finance Ministry go to market in coming days to raise up to $3bn in Eurobonds to close the year end financing gap.
The World Bank approved December 11 night a $300mn loan to help “prevent around 1mn Ukrainians from falling into poverty due to the
35 UKRAINE Country Report January 2021 www.intellinews.com
