Ukraine Fixed Income Weekly (November 30, 2015)

Eurobonds overview

 All Ukraine’s Eurobond prices lost last week, save the Ukraine-20 which gained 0.3 cents and was traded at 96.8 cents. Ukraine-19, Ukraine-21, and Ukraine-22 lost 0.4 cents on average and were traded at 97.7 cents, 96.0 cents, and 95.5 cents respectively. Ukraine-24, Ukraine-25, Ukraine-26, and Ukraine-27 lost 1.3 cents on average, and were traded at 93.6 cents, 94.5 cents, 93.1 cents, and 92.6 cents correspondingly. The price development most likely reflects a gradually increasing market offer for the new Eurobond issues.

 Among our top picks, Privatbank-21 gained 3 points, Privatbank-18 gained 2 points, while Ukrlandfarming-18 lost 1.3 points. Avangard-18 remained unchanged. In our view, the gains of the Privatbank’s issues reflects the successful completion of the restructuring operations on the issues, and the gradual recovery of the bank’s credit rating, whereas the loss of Ukralndfarming-18 may reflect price adjustment after the market gain of the previous weeks.


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 20% of contracts, medium-term bonds made 16% of contracts, and long-term bonds formed 64% of contracts. NBU acquired UAH 2.0 bn (+0.5% w/w) gov domestic bonds. Local banks, local non-bank corporates, and non-residents sold gov. domestic bonds worth UAH 393.9 mn (-0.5% w/w), UAH 48.6 mn ( -0.2% w/w), and UAH 196.6 mn (-0.9%) respectively. The total turnover of local govt. bonds on the “Perspectiva” SE amounted to UAH 2.5 bn compared with UAH  915 mn for the previous week.


Money markets

 Over the last week, the average USD/UAH exchange rate increased by 0.5% w/w and stood at UAH 23.9, closing at the level of UAH 23.9 on Friday. The average daily FX turnover on the interbank market increased by 7.9% w/w to USD 266.3 mn, while FX trading volumes amounted to USD  255.7 mn on Friday. The average outstanding amounts held on banks’ correspondent accounts decreased by 3.2% w/w or by UAH 889.0 mn to UAH 27.1 bn. 

Over the last week, all Kievprime indexes save the longest Kievprime 1Y  increased. The short-term Kievprime overnight (o/n) and Kievprime 1W  gained insignificantly, and were quoted at 19.1% and 20.1% respectively. Kievprime 1M, Kievprime 2M, Kievprime 3M, and Kievprime 6M gained 0.5% on average. Kievprime 1M was quoted at 22.8%, whereas Kievprime 2M, Kievprime 3M, and Kievprime 6M were quoted at 24.1% on average. The longest Kievprime 1Y lost 0.3% to be quoted at 24.1%. NBU extended no refinancing to banks during the week, whereas banks acquired NBU deposit certificates worth UAH 56.4 bn compared with UAH 62.1 bn for the previous week.


Macro & politics update

  •  On November 26, 2015, the Ukrainian Parliament adopted the amendments to the Ukrainian law on state registration of legal businesses, individual entrepreneurs, and civic movements, as well as some bylaws related to the issue. The law transfers the functions of state registration in these areas to local self-governments, state administrations, notaries, and banks. 
  • Ukraine’s state budget had a surplus of UAH 8.8 bn in January-September, 2015, against a planned yearly deficit of UAH 78 bn. The complication of the economic crisis negatively affected the execution of the fiscal plan, as Gross Domestic Product declined by an estimated 13% y/y, according to the Accounting Chamber of Ukraine. 
  • The deficit of the current account of Ukraine's balance of payment will fall to around 1% of GDP in 2015, despite the expected increase in energy imports in the fourth quarter of 2015, the Director of the monetary policy and economic analysis department at the National Bank of Ukraine (NBU) Serhiy Mykolaichuk stated.


 Corporate news

  • Meeting of holders of Kyiv City Eurobonds scheduled for December 8, 2015
  • Oschadbank announces closing of the reprofiling of the 2017 subordinated loan
  • Moody’s upgraded Ukreximbank’s and Oschadbank’s ratings to ‘Caa3’
  • Moody's upgrades MHP's rating to ‘Caa2’, stable outlook
  • Moody’s affirmed Privatbank’s rating at ‘Ca’