Ukraine Fixed Income Weekly (November 9, 2015)

Eurobonds overview

Ukraine’s Eurobond prices remained unchanged last week. Ukraine-15 traded at 82.8 cents, and Ukraine-16 at 78.9 cents. Ukraine-17, Ukraine-21, and Ukraine-22 traded at an average of 79.4 cents, whereas  Ukraine-20 and  Ukraine-23 were traded at 80.9 cents on average. Trades in Ukraine’s Eurobonds were on hold as the Ukrainian Finance Ministry announced the final settlement of the Eurobond exchange operations for November 12, 2015.

 The prices of all our top picks remained unchanged last week. We think that the development has been conditioned by expectations of upward adjustments in the overall ratings of all Ukrainian Eurobonds, corporate included, in connection with the final settlement of the debt restructuring operations of the Ukrainian Government. 

 

Local bond markets

The Finance Ministry made no placement on the domestic market last week. Secondary market activities for gov. bonds were distributed as following: short-term bonds accounted for 68% of contracts, medium-term bonds made 32% of contracts, and there were no deals with long-term bonds. NBU sold UAH 9.6 mn gov. domestic bonds, whereas local banks sold UAH 2.7 mn, local non-bank corporates acquired UAH 42.5 mn (+0.2% w/w), and non-residents players purchased UAH 17.6 mn (+0.1 % w/w). The total turnover of local govt. bonds on the “Perspectiva” SE amounted to UAH 919 mn compared with UAH  1.7 bn for the previous week.

 

Money markets

Over the last week, the average USD/UAH exchange rate increased by 0.1% w/w and stood at UAH 22.94, closing at the level of UAH 22.65 on Friday. The average daily FX turnover on the interbank market increased by 15.7% w/w to USD 325.4 mn, while FX trading volumes amounted to USD  399.5 mn on Friday. The average outstanding amounts held on banks’ correspondent accounts decreased by 12.7% w/w or by UAH 2.9 bn to UAH 20.0 bn. 

All Kievprime Indexes save the short-term Kievprime overnight (o/n) and Kiepriime 1W increased last week. The Kievprime o/n and Kievprime 1W lost 0.4% and 0.1% respectively, and were quoted at 18.6% and 19.6% correspondingly. The Kievprime 1M and Kievprime 1Y gained 0.1% to be quoted at 22.2% and 23.9% respectively. The Kievprime 2M, Kievprime 3M, and Kievprime 6M gained 0.3% and were quoted at an average of 23.6%.  

NBU extended no refinancing to banks during the week, whereas banks acquired NBU deposit certificates worth UAH 79.5 bn, compared with UAH 69.1 bn for the previous week.

 

Macro & politics update

  • Ukraine’s Prime Minister Arseniy Yatsenyuk has pledged to bring in a new Cabinet in two weeks. 
  • The law on the National Police, which cancels the existence of the Soviet-style militia and legitimizes the National Police of Ukraine, entered into force in Ukraine on Nov. 7, 2015 .
  • On Nov. 3, 2015, the World Bank’s Board of Executive Directors approved a USD 560 mn IBRD loan to finance the Road Sector Development in Ukraine. 
  • A consumer price deflation of 1.3% m/m was recorded in October 2015. Prices of food and beverages rose by 1.1% m/m, prices of durable goods by 1% m/m.  Utility prices fell by 13.8% m/m, prices of fuel and lubricants declined by 1% m/m. 
  • The surplus of Ukraine's consolidated balance of payment fell to USD 348 mn in September 2015. The deficit of the balance of payment dropped to USD 1 mn in 9M2015. The current account deficit amounted to USD 2 mn in 9M2015, while in January-August it was USD 3.2 bn.  
  • Ukraine’s foreign reserves grew by USD 188 mn in October 2015, or by 1.5%, and amounted to USD 12.962 bn by November 1, 2015

 

Corporate news

  • Ukrlandfarming does not consider a restructuring of its 2018 Eurobonds
  • Kyiv City Eurobonds are to be exchanged with sovereign Eurobonds