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protests that ousted president Viktor Yanukovych. The highest the country has scored was B1 (positive) in August 2008 as the entire region boomed before the global financial crisis struck that autumn.
Fitch rates Ukraine at B-​ on its foreign currency debt with no outlook indicated. The local debt is also rated at B- (none).
Fitch has become more cautious on Ukraine having removed its positive outlook call in December 2018. But the ratings have general recovered from Fitch “restricted default” rating in October 2015, following the Maidan events. The highest rating the country has had from Fitch was a BB- (positive) first awarded in May 2005 and again in October 2006, during a year-long investment frenzy when foreign banks bought up banks in the country believing the country was about to take off.
Standard & Poor’s (S&P) rates both Ukraine’s foreign and local debt at B-
with stable outlook.
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
Foreign holdings of Ukraine government hryvnia bonds have dropped by 35%​ since mid-February, when they peaked at $5.2bn, reports ICU, citing central bank figures. Since then, this figure has dropped by about $260mn a month, to hit $3.4bn today. Foreigners hold 12% of Ukraine’s government hryvnia bonds.
Ukraine’s Finance Ministry only raised UAH0.3bn (11.1mn) at its weekly bond auction on July 7 ​after ​drawing UAH1.3bn at the auction last week​, which was also down heavily on the week before​. The auction receipts came from the placement of 3M, 1Y, and 2Y bonds.
“Apparently, last week's ​resignation of NBU Governor​ Yakiv Smolii significantly damaged the confidence of local bond market players, though only causing a slight drop in auction receipts,” Evgeniya Akhtyrko of Concorde Capital said in a note. “Market participants understand that an ever-increasing likelihood of the NBU losing its independence​ poses a high threat of intensified devaluation of the national currency, which makes UAH-denominated debt less attractive.”
The lion’s share of the auction’s receipts – UAH292mn – came from the sale of 3M bonds to three bidders with a weighted average interest rate of 7.24% (the same rate for these bonds as a week ago).
In addition, three bidders bought 2Y bonds for UAH16mn at 10.20% (compared to 10.39% for these bonds last week). The rest of the auction receipts – UAH5mn – came from the sale of 1Y bonds to a sole bidder at 9.5% (vs. 9.7% for these bonds two weeks ago).
“Next week, MinFin will try to improve its receipts at the local debt market by offering 1Y local dollar bonds, which usually find high demand among market participants. At minimum, MinFin could expect some players will roll over some of the $672mn they will have received from the redemption of 1Y local Eurobonds on July 9,” Akhtyrko added.
58​ UKRAINE Country Report​ August 2020 ​ ​www.intellinews.com