Page 62 - UKRRptSept23

8.5 Fixed income
Ukrainian Eurobonds rose by 50% against investors' optimistic expectations. According to the FT, dollar-denominated bonds maturing in September 2025 are now trading at 31 cents on the dollar, compared to 20 cents in early June. Other foreign currency bonds also recorded similar growth. However, Eurobond prices remain extremely low. Such levels mean the market is convinced there is no alternative to future debt restructuring with a hard write-off. But the estimate of how much investors will be able to get increased. "We believe that the restructuring may be more favourable for us because the country has a higher solvency than we thought before," said an expert from the PGIM company, which owns part of the Ukrainian debt. The largest owners of Eurobonds of Ukraine are the BlackRock, Pimco, and Fidelity funds. In the spring of 2023, the Ministry of Finance announced that it would hold negotiations with private creditors on debt restructuring. Negotiations with commercial lenders are expected to begin in early 2024.
The NBU expanded the list of reserve bonds and reported on income from the sale of securities. Starting September 11, the National Bank will increase the list of benchmark bonds of the domestic state loan, through which banks can cover part of their required reserves, the regulator said in a statement. The domestic government bonds (OVDP) the Ministry of Finance first placed on August 29, 2023, will be added to the list. In total, there are already nine reserve bonds on the list. It is noted that the expansion of the list will contribute to the further increase of activity at auctions of the Ministry of Finance for the placement of domestic government bonds, which is essential for avoiding direct financing of the budget deficit by the NBU. From January 2023, banks have been allowed to count a particular list of benchmark OVDPs to cover up to 50% of the required reserves. Since 2023, the government has already raised more than UAH 360B from selling OVDP bonds and UAH 612B from the start of the war.
62 UKRAINE Country Report September 2023 www.intellinews.com