Page 41 - UKRRptApr19

8.4 Fixed income
Foreign investment in Ukraine government hryvnia bonds have tripled
since the start of the year, hitting UAH20.3bn, currently about $740mn. Last year, foreign investments in the bonds only increased by 22%. Foreign investors may be shrugging off the political risk of an election year or may be positioning themselves for the opening of a Clearstream link in coming months. This will allow desktop trading.
8.4.1 Fixed income - bond news
Ukraine’s state-owned Oschadbank, the second largest state-owned lender by assets, has paid $420mn in amortisation on its $700mn Eurobond with final maturity in 2023, the bank reported on March 7. According to the bank, the timely payment of a significant amount to creditors is evidence of the bank’s strong liquidity and operating stability. Oschadbank issued two Eurobonds for $700mn (due in 2023) and $500mn (due in 2025) with gradual amortisation of the bonds starting from 2019-2020 based on a debt restructuring agreement reached in August 2015. Its conditions call for the $700mn bond to amortize by 60% in March 2019, and then by 5% semi-annually by March 2023. In addition to the $420mn amortisation payment, the bank is scheduled to pay a $32.8mn coupon on March 11. Alexander Paraschiy at Kyiv-based brokerage Concorde Capital believes that this is "an expected event", as we had no doubt the bank will be able to make the payment. "This year will be very intensive for Oschadbank in making Eurobond payments with $549mn in total coupons and amortisation," he wrote in a note on March 7. "We see no problems for the bank to make all these payments on time," he added.
Ukraine’s national railway company Ukrzaliznytsia (Ukrainian Railway) paid off $150mn, the first part of loan participation notes (LPN) as well as the coupon, the company said on March 14, as cited by Interfax Ukraine. Ukrzaliznytsia chairman Yevhen Kravtsov said that a loan for refinancing of the debt was raised on the domestic market from Oschadbank and the State Agency for Infrastructure Projects of Ukraine. "The funds were borrowed in the national and foreign currencies, and the currency-pegged liabilities were met. This additionally cut the potential risks for seeing exchange rate losses," Kravtsov said the news agency said. The timely payment confirms the support of the railway sector by the state and financial stability of Ukrzaliznytsia. It also shows to creditors that the state and company have a responsible attitude to servicing own debts. Ukrzaliznytsia placed its debut five-year $500mn Eurobond in May 2013 through the specially created company Shortline Plc. The company has an ambitious $36bn investment programme and has been trying to issue more bonds, but in its last attempt at the end of 2018 it was met by an unreceptive market . In February the company said that it will try again this year and still hopes to issue $1bn. With the company’s gross debt of UAH34.2bn as of August 2018, its net debt-to-Ebitda ratio was at 1.5x, Kravtsov said in a statement on February 15. The company has a leverage covenant of 3.0x, based on its agreements with the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB). "That means that with Ebitda at the current level, we are capable of increasing our debt level by UAH25bn to UAH30bn," he added.
41 UKRAINE Country Report April 2019 www.intellinews.com