Ukraine Fixed Income Weekly (January 19-23, 2015)

Eurobonds overview

Prices of the Ukrainian sovereign Eurobonds once again showed a rather significant decline during the last week. The prices of short-term Eurobonds (UKRAINE-15 and UKRAINE-16) declined by 7-8 points, UKRAINE-17 prices dropped by 5 points. The major reason for this was the speech of the Minister of finance Natalie Jaresko, where she hinted that Ukraine may negotiate with the holders of its sovereign debt on the possible restructures.

Among our top picks, the prices of Ukrexim-16, and Ukrlandfarming-18 declined by 4-5 points. A serious drop of Eurobond prices of state-owned Oschadbank and Ukreximbank was caused by the investors’ fears of possible restructuring. Prices of all Privatbank issues (PRIVAT-15, PRIVAT-16, PRIVAT-18) dropped by 3 points.

 

Macro & politics

The Ukrainian authorities have requested a multi-year arrangement with the IMF, supported by the extended fund facility, to replace the existing stand-by arrangement. The new arrangement with the IMF would support immediate macroeconomic stabilization measures as well as broad and deep economic reforms over several years to restore sustainable growth.

According to the Ukrainian president Petro Poroshenko, international investors agreed to provide Ukraine with USD 1 bn. 

Japan will provide Ukraine with a USD 300 mn loan. These funds will be transferred to the international reserves of Ukraine. The main aim of the loan delivery is to help pay off Ukraine’s external debt.

According to the data released by the State Statistical Service of Ukraine, industrial production in Ukraine in January-December-2014 declined by 10.7% y/y. In December alone it fell by 17.9% y/y and by 2.1% m/m.

 

Local bond markets

Last week the Ministry of Finance held two primary market auctions on 6-month and 2-year local government bonds, denominated in UAH, but received no bids at all.

At the next scheduled auction on January 27, the Ministry of Finance is going to sell 3-month UAH-denominated local government bonds. Moreover, on extraordinary auction on January 26, the Ministry will propose banks similar 3-month UAH-denominated government bonds.

 

Money markets

During the last week the official USD/UAH exchange rate on the interbank market slightly declined by 0.5% to the level of 15.81. Average turnover of FI sales on the interbank market decreased by 2.2%, and the daily volume of sales on Friday constituted the equivalent of USD 285.6 mn.

Outstanding amounts held on banks’ correspondent accounts last week declined by UAH 1.2 bn or 3.5% to UAH 32.1 bn. Kievprime overnight (o/n) as well as Kievprime 1W rose by 100 bps to 11.00% and 13.5% respectively; Kievprime 1M increased by 5 bps to 18.25%; Kievprime 3M rose by 30 bps to 19.50%. At the same time Kievprime 6M rose by 20 bps to 19.4%, and Kievprime 1Y decreased by 20 bps to 19.2%.

The NBU provided refinancing to the banks in the amount of UAH 1.2 bn.

 

Corporate news

  • Ukrainian Railways to decrease cargo transportation by 13% y/y in 2015
  • Oschadbank posted UAH 8.5 bn of losses in 2014
  • Privatbank announced UAH 749 mn of profit in 2014

 

Disclaimer

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