ESCP Ukraine Fixed Income Weekly April 11, 2016

Eurobonds overview

The prices of Ukraine’s long-term Eurobonds Ukraine-25, Ukraine-26, and Ukraine-27 remained unchanged at an average 89.6 cents last week. The other sovereign issues lost 0.5 cents on average. Ukraine-19 was quoted at an average 94.6 cents, Ukraine-20 at 93.9 cents, Ukraine-21 at 93.1 cents, Ukraine-22 at 92.2 cents, Ukraine-23 at 91.4 cents, and Ukraine-24 at 89.6 cents. The scandal related to the “Panama Papers’, which hit a blow at the Ukrainian President and the overall reputation of the country, together with the negative result of the referendum on the EU-Ukraine Association Agreement in the  Netherlands have sent chilling win on the sovereign Eurobond market, in our view.

Three out of our five top picks gained in price last week. Prbank-18 and Prbank-21 gained 1 points each, whereas Ferrexpo-19 gained 0.3 points. Avinpu-18 remained unchanged, whereas Ukrlan-18 lost 0.5 points. Privatbank may have received support from the rumors about an agreement between the major stakeholder of the bank and the government as to the defense of the business interests of the bank’s shareholder. The negative development on Ukrlandfarming-18 is most likely follows the launch of the debt restructuring offer of the company last week.

ESCP Ukraine Fixed Income Weekly April 4, 2016

Eurobonds overview

Nearly all Ukraine’s Eurobonds’ prices gained 0.8 cents on average last week, save the Ukraine-23 which gained 0.5 cents to be traded at 91.1 cents on average. Ukraine-24, Ukraine-26, Ukraine-27 were traded at 88.6 cents on average, Ukraine-19 at 94.6, Ukraine-20 at 93.9 cents, Ukraine-21 at 93.0 cents, Ukraine-22 at 92.0 cents, Ukraine-23 at 91.2 cents, and Ukraine-25 at 89.8 cents.  We think that the sovereign Eurobond price increase was triggered by the rumors about the near-completion of the negotiations about the new parliamentary coalition and the new Prime-Minister. The relative consolidation of the national currency over the recent weeks may also have helped uphold the sovereigns.

The price indications of Prbank-21, Prbank-18, and Avinpu-18 remained unchanged, whereas Ukrlan-18 and Ferrexpo-19 lost 5 points and 3 points respectively. The negative price development on the issues of Ukrlandfarming and Ferrexpo might have been the result of a negative assessment of the debt negotiation of Ukrlandfarming and the annual results of Ferrexpo. In the meantime the market seems to have keep a wait and see stance on Privatbank’s and Avangard’s issues ahead of the disclosure of their financial results for 2015.

ESCP Ukraine Fixed Income Weekly March 28, 2016

Eurobonds overview

Nearly all Ukraine’s Eurobonds’ prices lost last week, save the longest Ukraine-27 which remained unchanged at an average 87.8 cents. Ukraine-19, Ukraine-20, Ukraine-21, Ukraine-22, and Ukraine-23 lost 0.3 cents on average, and were traded at an average price of 94.1 cents, 93.4 cents, 92.5 cents, 91.6 cents, and 90.9 cents correspondingly. Ukraine-24 and Ukraine-25 lost 0.6 cents on average, and were traded at 88.8 cents and 89.6  cents respectively. Ukraine-26 lost 0.3 cents and was traded at 88.4 cents. The negative sovereign Eurobonds’ price pattern most likely reflected disappointment with the nomination of the more moderate, political figure of the Parliament’s Speaker Volodymyr Groysman as the main contender to the Prime Ministry instead of the pro-western, technical, and reform-minded Finance Minister Natalie Jaresko. The price indications of UKRLAN-18 and PRBANK-21 gained 4.7 points and 1.0 points respectively. The quotations for PRBANK-18 remained unchanged, whereas AVINPU-18 lost 0.5 points. With have included Ferrexpo-19 in our top picks, considering the demonstrated progress of the company in the year 2015, notwithstanding the unsupportive Ukrainian and global  environment. The Eurobond issues of the company presents upside potential with an estimated fair value of about 80 cents against a current market pricing of under 70 cents.

ESCP Ukraine Fixed Income Weekly March 21, 2016

Eurobonds overview

Most Ukraine’s Eurobonds’ prices gained last week, save the longest Ukraine-26 and Ukraine-27, which lost 0.1 cent to be traded at 87.7 cents on average. The shortest Ukraine-19 and Ukraine-20, together with the longer Ukraine-24 and Ukraine-25 gained 0.5 cents. Ukraine-19 and Ukraine-20 were traded at an average 93.6 cents, whereas Ukraine-24 and Ukraine-25 were traded at 88.7 cents and 89.6 cents respectively. The medium-term Ukraine-21, Ukraine-22, and Ukraine-23 gained 0.9 cents on average to be traded at 92.2 cents, 91.0 cents, and 90.4 cents respectively. The sovereign Eurobond prices might have been driven by the rumors about the start of the negotiations to appoint the current Finance Minister Natalie Jaresko as Prime-Minister, on  background of supportive statements by the highest level officials of the IMF, EU, and the US.  

The price indications of UKRLAN-18 and PRBANK-18 lost 1.25 points and 4.0 points respectively, mostly on downward revision of the country’s growth prospects in the years 2016-2018, and on background of rumors about conflict of interests involving the two companies. The quotations for PRBANK-21 and AVINPU-18 remained unchanged.

ESCP Ukraine Fixed Income Weekly March 14, 2016

Eurobonds overview

The prices of Ukraine’s Eurobonds lost 0.5 cents on average last week. Ukraine-19 and Ukraine-20 traded at 93.7 cents on average; Ukraine-21 traded at 92.4, Ukraine-22 and Ukraine-23 were at 90.8 cents on average; Ukraine-24, Ukraine-25, Ukraine-26, and Ukraine-27 traded at 88.7 cents on average. The price development seems to follow the uncertainty around the constitution of the Cabinet of Ministers and the candidate for the position of the  Prime Minister, considering the near-inevitable reshuffling of the government and the formation of the new coalition in the Parliament (Verkhovna Rada).  

The price indications of UKRLAN-18 went up by 1.25 points during last week, which could be related to a slight increase in agricultural commodity prices. Quotations of PRBANK-21 increased by 2 points, PRBANK-18 — by 4-10 points (depending on the source), which might be related to the bank revealing a new online P2P loan platform for individuals and an online document workflow platform for business. Prices of our other top picks remained unchanged.