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Ukraine Markets Daily (February 27, 2018)

Market news

  • Ukreximbank’s upcoming Eurobond issue was rated at ‘B-(emr)(EXP)’ by Fitch

Market comment

The UX index increased by 0.6% yesterday and the PFTS index was up by 0.2% (in UAH terms). The WIG-Ukraine index decreased by 1.0%. On the interbank exchange market, the UAH/USD was up by 0.2% to UAH 26.99 (mid price), according to Thomson Reuters. The official exchange rate reported by the NBU was UAH 26.99.

 

Ukreximbank’s upcoming Eurobond issue was rated at ‘B-(emr)(EXP)’ by Fitch

Fitch Ratings assigned upcoming hryvnia-denominated Eurobond issue an expected Long-Term rating of ‘B-(emr)(EXP)’ and the recovery rating of ‘RR4’. The ‘emr’ suffix denoting embedded market risk means that all payments will be made in U.S. dollars instead of the currency of the notes – Ukrainian Hryvnia.

Our view:

Rating assigned by Fitch is the same as Ukreximbank’s Long-Term Local-Currency IDR, which is ‘B-‘ just like Ukraine’s sovereign rating. Due to the fact that the Bank is state-owned, its rating could not be higher than the sovereign ceiling and is very sensitive to it, which means that Ukreximbank’s issue’s rating review may happen when Ukraine’s rating assigned by Fitch will change. Considering the rating and nature of the upcoming placement, we expect the Eurobond’s issue volume not to exceed USD 700 mn with pricing at the level between 16-17%.