Ukraine Markets Daily (November 07, 2017)

Market news

  • Ukraine’s international reserves had a minor growth of USD 98 mn in October
  • PrivatBank received the acceleration notice from its New Trustee

Market comment

The UX index decreased by 0.7% on Friday and the PFTS index was down by 0.4% (in UAH terms). The WIG-Ukraine index increased by 1.3%. On the interbank exchange market, the USD/UAH was down by 0.6% to UAH 26.80 (mid price), according to Thomson Reuters. The official exchange rate reported by the NBU was UAH 26.96

 

Ukraine’s international reserves had a minor growth of USD 98 mn in October

According to the preliminary information provided by the National Bank of Ukraine (NBU), as of November 1, 2017 international reserves reached USD 18,736 mn, growing by USD 98 mn (+0.5% m/m) during October. Since the year beginning, reserves grew by 21.0%. Reserves were replenished through the foreign currency local bonds issue amounting to USD 170 mn and through the USD 100 mn foreign currency swap with the local bank. Meanwhile the NBU spent USD 147 mn on the foreign currency interventions within the interbank market to smooth the Ukrainian Hryvnia volatility during the previous month. As for November 1, 2017, the amount of international reserves covers 3.7 months of future imports and all current foreign obligations of the Central Bank and the Government.

Our view:

The international reserves growth in October wasn’t as significant like a month before, but still it saved its positive tendency to grow, which is quite positive considering some payments needed to be made till the end of the year. The NBU revised its reserves forecasts for the end of 2017, reducing the final target from USD 20 bn to the level of USD 18.6 bn, which is already reached.

 

PrivatBank received the acceleration notice from its New Trustee

According to the Notice to Noteholders published on the London Stock Exchange website on November 6, 2017 by the issuer of PrivatBank’s Eurobonds, Bank’s New Trustee – Madison Pacific Trust Limited, which was assigned on October 3, 2017, issued an acceleration notice to PrivatBank and sent a copy of the acceleration notice to the Issuer on November 2, 2017. The acceleration notice covers two PrivatBank’s Eurobonds issues with the outstanding amount of USD 175 mn and USD 160 mn and maturity on February 2, 2018 and on January 23, 2018 correspondingly. This notice tells that PrivatBank should pay off all debts on these issues, including interest and fees.

Our view:

We think that such actions from the side of the New Trustee will not have any positive results, because the Ukrainian Government, as the Bank owner, did not show any willingness to recognize this debt and move forward through the negotiation process with the noteholders. Even though, in the end of October the National Bank of Ukraine excluded the Eurobonds issuer from the PrivatBank Banking Group

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