Page 60 - UKRRptJul19

attempt to issue a new bond is not a surprise to us. "If the deal happens, that will remove concerns about the company’s foreign currency liquidity. Most likely, the new bond will be priced at 8%-9% YTM, depending on its maturity," he added in a note on June 25. The company is hoping to cash in on improving sentiment amongst bond investors following the election of Ukrainian president Volodymyr Zelenskiy in April and the liberal agenda he seems to be following. The Ukrzaliznytsia issue also hopes to ride the coat tails of the sovereign €1bn Eurobond issued by the state on June 14 with the attractive yield of 6.75% that was met enthusiastically by the market. Ukrzaliznytsia attempted to issue its own Eurobonds in February last year shortly after the state issued its last $3bn Eurobond last year, but was met with an unenthusiastic market and withdrew the issue at the last minute. Ukrzaliznytsia is in technical default on its $500mn Eurobonds, which will be amortised by $150mn both in March and September 2019 and then by $50mn semi-annually between March 2020 and September 2021.
Foreigner bought half the bonds offered at auction on June 11, according to the Ministry of Finance.
Ukraine's Finance Ministry on June 11, 2019 placed debut six-year government domestic loan bonds for UAH3.42bn at 15.85% per annum, and over the half of the securities were bought by nonresidents, Finance Minister Oksana Markarova said.
"Another victory! Six-year instrument at 15.85%! ... Most [buyers] are nonresidents," she wrote on her Facebook page during a road show, which the Finance Ministry team is conducting this week to place new eurobonds.
"While we are completing meetings with investors in London about seven-year eurobonds denominated in euros and are preparing for a flight to Frankfurt, the Finance Ministry team is simultaneously implementing our debt management strategy for three years on the domestic market," the finance minister said.
The Finance Ministry managed to attract UAH6.59bn, of which UAH1.38bn brought from another placement of two-year securities, UAH0.75bn of one- year securities, and UAH0.46bn each of three- and six-month bonds.
The Finance Ministry, compared with the auctions a week ago, managed to slightly reduce the rate of placement of six-month and one-year bonds – respectively from 18.5% to 18.39% per annum and from 18.5% to 18.45% per annum. To this end, the seller refused to additional demand in the amount of about UAH600 mn. The rate for three-month and two-year securities remained at the same level – 18% and 17.95% per annum, respectively.
In addition, the ministry decided not to sell the six-year bonds under three applications for a total of UAH200 mn, in which the rates reached 16% per annum.
As for the US dollar-pegged papers, the rate remained at the level of 7.25% per annum, and the volume of placement fell to $4.4 mn.
60 UKRAINE Country Report July 2019 www.intellinews.com