Page 62 - UKRRptAug22

Moreover Fitch experts expect a broader restructuring of the government's commercial debt to be required, although the timing remains uncertain. This reflects severe stresses to Ukraine's macro-financial position, public finances and external finances as a result of the country’s protracted conflict with Russia.
On July 20, the Ukrainian Cabinet of Ministers resolved to seek a two-day deferral of external debt payments. For the deal to come into force, the Kiev government is supposed to agree on new terms with the debt holders. The international group of Ukraine’s creditors, which includes Britain, Canada, France, Germany, Japan and the United States, supported Kiev’s request to suspend debt repayments until the end of 2023. The group also urged Ukraine’s private-sector bondholders to show a similar approach.
Fitch has downgraded Naftogaz, Ukrenergo, and Ferrexpo ratings. Fitch, the international rating agency, lowered the long-term rating of Naftogaz in foreign currency to the level of RD (limited default). The agency said that this happened after the company failed to pay off its Eurobond debt on July 19. Fitch also has downgraded Ferrexpo's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC+' from 'B-' and removed it from Rating Watch Negative on the basis of deteriorated operating conditions in Ukraine and increased country risks. Moreover, Fitch has downgraded Ukrenergo's five-year state guaranteed notes' senior unsecured rating to 'C’ from 'CCC' following the announcement of a consent solicitation to defer the debt servicing of its notes due in 2026.
8.5 Fixed income
International creditors have agreed to postpone Ukraine's payments on Eurobonds. The group of creditor countries is ready for the suspension of the servicing of Ukraine's national debt from August 1 until the end of 2023 and calls on the holders of its Eurobonds to do so. They also urge investors to agree to Ukraine's proposed restructuring of GDP warrants. This comes from a statement by creditors published on the Ministry of Finance of Germany website. The group of creditors, whose observers include Australia, Austria, Belgium, Brazil, Denmark, Finland, Ireland, Israel, Italy, Korea, the Netherlands, Norway, Spain, Sweden, and Switzerland, strongly urges all other official bilateral creditors to reach an agreement with Ukraine on the suspension of debt service.
Ukraine seeks to delay coupon and principal payments on foreign bonds by two years, as well as to change the terms on its 2040 GDP warrants, according to a decree from the government. Ukraine seeks agreement with bondholders by Aug. 15
The Ministry of Finance has raised the rates of dollar military bonds to 4-4.5%. The Ministry of Finance of Ukraine, at the primary auctions on July 12, refused to increase the yield of military bonds in hryvnia, as a result, the volume of their sale remained at a low level, with a volume of UAH 143.5M. However, the ministry increased the yield of dollar bonds, which made it possible to attract $330.5M immediately. The rates for dollar military bonds were:
3-month bonds at 3.5% attracted $140.6M 6-month bonds at 4% attracted $183.8M 1-year bonds and 4.5% attracted $6M
62 UKRAINE Country Report XXXX 2018 www.intellinews.com