Ukraine Fixed Income Weekly (May 25, 2015)

Eurobonds overview

Last week the prices of Ukrainian sovereign Eurobonds Ukraine-15 declined by 1.3 cents to 50.8 cents,  whereas the longer term Ukraine-21 and Ukraine-22 fell by 0.8 cents to 45.5 cents and 46.3 cents respectively, which was most likely caused by the Ukrainian parliament’s decision to grant the right to an external debt payment moratorium to the government of Ukraine. However, the prices of other short-to-medium term bonds (Ukraine-2016, Ukraine-2017, and Ukraine-2020) remained virtually unchanged at 46-47 cents.

Among our top picks, the price of Avangard-15 gained 3 points, while  Ukrlandfarming-18 lost 1 point. Indications on Privat-18 issue declined by 2 points, whereas Oschadbank-18 and Ukreximbank-18 added half a cent.


Macro & politics

Ukraine’s industrial production fell by 21.7% y/y in April 2015, deepening from a decline of 21.1% y/y in March. Month-on-month, industrial production decreased by 2%. Year-to-date industrial decline for January-April 2015 amounted to 21.5%.

The Ukrainian Parliament adopted in full at a second hearing some amendments to the laws of Ukraine, concerning banks’ retail deposits.  The amendments specify the distinction between term and demand retail deposits, and allow individuals’ deposit withdrawal only on the conditions stated in banks contracts, namely at the maturity of the contract. 

The ad-hoc committee of Ukraine’s sovereign debt holders unveiled the identities of the participants to debt restructuring negotiations. The committee consists of funds managed and/or advised by BTG Pactual Europe LLP, Franklin Advisers Inc., TCW Investment Management Company and T. Rowe Price Associates, Inc. They hold approximately USD 8.9 bn of the Ukrainian sovereign debt. 

The Ukrainian Parliament endowed the Government with the right to impose a moratorium on payments related to the public and state-secured debt to foreign private investors, where it is suitable.


Local bond markets

Last week the Ministry of Finance held no primary market auctions at all. Secondary market activities shifted toward short-term government bonds. All players but corporates have been increasing their holding of government bonds during the week.  The total turnover of local government bonds on the “Perspectiva” stock exchange amounted to UAH 3.4 bn (-21% w/w). 


Money markets

Over the last week, the average USD/UAH exchange rate declined by 2.5% w/w to UAH 21.1, and closed at a level of UAH 20.8 on Friday. Average daily FX turnover on the interbank market increased by 3.1% to USD 258.8 mn, while FX trading volumes amounted to USD 275.4 mn on Friday.

Average outstanding amounts held on banks’ correspondent accounts last week decreased by UAH 2.5 bn or 9.5% to UAH 23.7 bn. Kievprime overnight (o/n) remained unchanged at 21%, Kievprime 2W, 3M, and 6M dropped by 10 bps to  26.3%, whereas Kiev 1M and 1W fell by 20 bps and 30 bps respectively to 28% and 23.5%.  NBU bank refinancing amounted to UAH 355 mn during the week, compared with UAH 272 mn a week earlier. Banks acquired NBU deposit certificates worth UAH 45.8 bn during the week, compared with UAH 45.1 bn last week.


Corporate news

  • Ferrexpo’s AGM approves USD 3.3 cents final dividend
  • Metinvest misses USD 114 mn in Eurobond payment
  • Ukrzaliznytsia made a coupon payment on its USD 500 mn Eurobonds



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