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Eavex Ukraine Fixed Income Weekly: Feb 13

Quotes for Ukrainian sovereign Eurobonds rose last week following surprisingly impressive preliminary data indicating that the country’s GDP grew by 4.6% YoY in 4Q16. Positive sentiment also came from a USDA report that said Ukraine’s grain export forecast had been increased by 1.5mn tonnes to 40.4mn tonnes in the 2016/17 agricultural year (July-June). The two factors may actually be related, as the bump in 4Q growth could be due to figures that raise the estimate of Ukraine’s national crop harvest totals. The situation also looked better on the Donbass front, with relative calm returning to the hotspot of Avdyivka after the previous week’s heavy fighting.
The benchmark Ukraine-27s bonds rose by 2.3% to 94.5/95.5 (8.6%/8.4%) and the shortest outstanding sovereign issue, Ukraine-19s, edged up 0.4% to 100.0/100.5 (7.7%/7.5%). The VRI derivatives (linked to Ukraine’s future GDP performance) gained 0.8% to close at 30.0/31.0 cents on the dollar.
In corporate issues, Metinvest-17s rose 0.5% to 98.0 cents on the dollar after the company said it has finally received restructuring approval from its creditors. Metinvest’s outstanding three bond issues will be combined into a single new issue with maturity in December 2021 and a coupon of 10.875% which will be partly capitalized. Kernel-22s climbed 0.2% to 100.8/101.1 (8.6%/8.5%) and MHP-20s gained 1.6% to 100.5/101.3 (8.0%/7.8%).
The defaulted issues of PrivatBank were unchanged near 30 cents, ignoring a new statement from the NBU that the regulator will not change its position on bailing PrivatBank’s bondholders into the bank’s rescue, saying the move was justified and legal. The nationalization of the bank has so far cost the national budget USD 4.3bn, and an upcoming audit should reveal how much more might be added to the bill. Quasi-sovereign UkrEximBank-25s appreciated by 1.1% to 97.2/98.3 (10.5%/10.1%) as the bank’s net loss of UAH 1.0bn for FY16 did not affect investor sentiments thanks to continued capital injections from the state.
The yield on the government’s UAH-denominated VAT-19s (a benchmark for domestic interest rates) was unchanged at bid/ask of 16.50%/16.00%.
The hryvnia finished essentially unchanged for the week, with interventions from the NBU dampening some appreciation pressure. The national currency ended at 27.25 UAH/USD on Friday (Feb 10) despite an intra-day attempt to strengthen to 27.00 UAH/USD. The country had USD 15.4bn of foreign currency reserves at the beginning of the month, according to the NBU.
You can receive additional details about developments in Ukrainian fixed income from the Eavex Sales Team at [email protected].

Eavex Capital welcomes any questions or comments you may have regarding our research products.
Please contact our office in Kyiv at 380-44-590-5454, or by email:

Alexander Klymchuk, Head of Sales, [email protected]
Dmitry Churin, Head of Research, [email protected]