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Concorde Capital Research: Ukraine places 5Y Eurobonds at 9.0%, 10Y at 9.75% raising USD 2 bln

October 26, 2018 | Cbonds

Ukraine’s Finance Ministry has completed its book building for its new international bonds (UKRAIN), having raised USD 2 bln, the Interfax news agency reported on Oct. 25, citing its anonymous sources. Based on the sources, MinFin has set about a 9.0% rate for 5-year bonds (maturing in February 2024), raising USD 750 mln; as well as a 9.75% rate for 10-year bonds (maturing in November 2028), raising USD 1,250 mln.

Alexander Paraschiy: The results imply Ukraine’s new 5-year bond was placed at a 25 bps spread to the existing sovereign curve, while the spread of the 10-year bond is 45 bps. Proceeds from the placement will cover most of Ukraine’s budget deficit for 2018, which is planned at UAH 80 bln (or about USD 3 bln), but is likely to be smaller in fact. In addition, it will help the nation to boost its gross international reserves, which will return to a safe level of above three months of future imports.

MinFin’s placement rate will be used as a benchmark for the placement of the 5-year bonds of Naftogaz (NAFTO), which is likely to take place in the nearest weeks. Taking into account that the spreads to sovereign curve for the bonds of Naftogaz peers (e.g. state-controlled gas giants of Russia and Kazakhstan) are 60-75 bps, it is likely that the Ukrainian state gas company will have a yield for its bonds of 9.5%-9.8%, if the local bond market and perception to Ukraine’s risk remain the same.

Company: Ukraine

Full company nameUkraine
Country of riskUkraine


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