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Eavex Capital Research: Ukrainian Eurobonds weekly comment

April 23, 2018 | Cbonds

Ukrainian sovereign Eurobonds sold off rather heavily last week after Finance Minister Oleksandr Danyliuk admitted that the country has failed to meet two key conditions for continued cooperation with the IMF. The conditions are the adoption of a law on an anti-corruption court and the introduction of a mechanism to adjust heating tariffs to market rates. Also importantly from the point of view of the IMF, it is now unlikely that the legalization of rural land trading, a hot-button political issue, will be passed before the presidential election set for March 2019.

The benchmark long-term Ukraine-27s issue slumped 2.7% to close at 99.6/100.3 (7.8%/7.7%) and the longest outstanding sovereign, Ukraine-32s, slid 3.2% to 93.5/94.5 (8.2%/8.0%). Medium-term Ukraine-23s also took a 1.9% hit to end at 101.7/102.5 (7.4%/7.2%). The VRI derivatives (linked to Ukraine’s future GDP growth with expiration in 2040) edged down 1.2% to 68.0/69.0 cents on the dollar.

In corporate debt papers, Kernel-22s fell 1.1% to close at 106.0/106.2 (6.9%/6.8%) as the company reported an unimpressive operational update for the Jan-Mar quarter. The 2024 Eurobonds of energy group DTEK were unchanged at 108.5/109.3 (8.9%/8.8%), while those of state-owned Ukrainian Railways (RAILUA-21s) inched down just by 0.2% to 105.8/106.5 (7.9%/7.7%) as the monopoly announced an increase in passenger rail tariffs by 12% in May. The company finished FY17 at breakeven as the historically loss-making passenger segment was balanced by profits in the main cargo business.

Quasi-sovereign UkrEximBank-25s were down by a moderate 0.3% to 106.7/107.3 (8.5%/8.4%) and OschadBank-23s also edged lower by 0.3% to 105.3/106.0 (8.0%/7.9%), as the performance of these bonds tends to lag the sovereigns by a week or two.

Issue: Kernel Holding, 8.75% 31jan2022, USD

StatusCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
outstandingUkraine01/31/2022500,000,000 USD-/B/BB-

Company: Kernel Holding

Full company nameKernel Holding S.A.
Country of riskUkraine
Country of registrationLuxembourg
IndustryFood industry


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