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Ukrainian Eurobonds weekly comment

May 05, 2016 | Cbonds

Dmitry Churin, Head of Research, Eavex Capital:

Benchmark Ukrainian sovereign Eurobonds saw a solid rise over the last week of April, with the 10-year Ukraine-2026 issue adding 2.5% to 93.5/94.3 (8.7%/8.6%) as strong demand for emerging market debt instruments acted as a positive driver for Ukrainian debt papers. Also, more encouraging news regarding cooperation between Ukraine and the IMF appeared in the form of the Cabinet’s approval of an increase in household natural gas/heating tariffs, a key IMF requirement for resumed lending. Bringing the household tariffs up to the economic breakeven level should help to balance the national budget and to finally stamp out the corruption schemes in state-owned energy behemoth NaftoGaz.

The shortest outstanding Ukrainian bonds, which are due in 2019, edged up 0.2% to 96.8/97.4 (8.9%/8.7%). The VRI derivatives (linked to Ukraine’sfuture GDP performance) declined 4.6% to 30.5/31.5 cents.In the corporate universe, Metinvest-18s, which are the subject ofrestructuring talks, gained 6.3% to 60.7/62.7 cents after the companysaid that its financial position has considerably improved thanks to risingprices for steel on global markets. DTEK-18s, which are also certain to berestructured, edged up 1.2% to 41.0/43.0. DTEK bondholders approveda moratorium on coupon payments until Oct 28 of this year, which thegroup hopes will give it the necessary breathing space to complete therestructuring deal.

Financial sector bonds were higher despite most banks again posting netlosses due to large bad loan provision charges. UkrEximBank-25s added1.5% to 90.4/91.6 (11.5%/11.3%) and OschadBank-23s climbed 0.9% to90.3/91.7 (11.4%/11.1%).

Company: Ukraine

Full company nameUkraine
Country of riskUkraine


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