Ukraine Markets Daily (November 30, 2016)

Market news

  • EIB considers EUR 150 mn loan to Ukrzaliznytsia

Market comment

The UX index was up by 0.2% Yesterday, and the PFTS index (in UAH terms) remained unchanged. The WIG-Ukraine index was up by 1.0%. On the interbank exchange market, the USD/UAH was down by 0.8% to UAH 25.46 (mid price), according to Bloomberg. The official exchange rate reported by the NBU was UAH 25.60.

 

EIB considers EUR 150 mn loan to Ukrzaliznytsia

On November 23, 2016, the European Investment Bank (EIB) has approved the allocation of EUR 150 mn to the Ukrainian Railway Company, PJSC Ukrzaliznytsia, in order to finance railroad upgrade, according to information included in the registry of projects to be financed by the Bank. The EIB financing is part of a EUR 314 mn railway modernization project, involving 250 km of railways in the Southern regions of Ukraine, according to the information. The Ukrainian project is currently at a stage of appraisal and negotiation, according to a notice in the project registry, therefore waiting final financing approval by the EIB Board of Directors, and further loan signature. Under its financial plan for 2017, Ukrzaliznytsia is considering using EUR 70 mn from a EUR 150 mn EBRD loan in order to upgrade its electricity infrastructure in the Southern region of Mykolayev. Additionally, the company intends to use EBRD fund for purchase of about 3600 freight wagons, while contemplating to add about 6600 new railcars to its rolling stock on aggregate.

Our view:

The news is POSITIVE showing the company to have secured the support of its development strategy by the prominent International Financial Institution. However, we think that the final approval of the loan agreement, and therefore the launch of the long-term project financing of the company, is still pending upon progress toward the company restructuring, and handling the issue of control over its assets located in the Eastern Ukrainian conflict zone and the adjacent territory.