Ukraine receives net USD 1.32 bln from Eurobond placement & repayment

Ukraine’s State Treasury received on Sept. 26 USD 1.32
bln from the placement of USD 3 bln in Eurobonds maturing in 2032, the Finance Ministry reported the same day. The rest of
the total proceeds from the Eurobond placement, or USD 1.68 bln, were directed
to purchase the bonds maturing in 2019 and 2020. The raised funds will be used
for financing general state expenses of the state budget, MinFin declared.

Recall, Ukraine placed on Sept. 18 a new USD 3 bln issue of 15-year Eurobondsat a coupon rate of 7.375%. The same day, it agreed to purchaseUSD 1.12 bln in Eurobonds maturing in 2019 at 106.00% of par and USD 0.42 bln
in Eurobonds maturing in 2020 at 106.75% of par.

Alexander Paraschiy: With USD
1.68 bln used for the repurchase of old bonds, USD 0.51 bln used to pay the
regular coupons on all state Eurobonds and USD 0.06 bln spent so far on ForEx
interventions in September, Ukraine’s gross international reserves are likely
to grow just USD 0.75 bln this month to about USD 18.75 bln.

By the year end, the Ukrainian government will have
spent at least USD 1.25 bln to repay its debt under local Eurobonds and to the
IMF, and also may spend some USD 0.2-0.5 bln for ForEx interventions. To keep
its end-2017 gross reserves at USD 18.5 bln, as we have forecasted, Ukraine
will have to secure at least a USD 1 bln loan tranche from the IMF and about
USD 0.5 bln in other foreign currency financing (e.g. from the placement of
local Eurobonds). So far, we remain optimistic about a new IMF tranche by the
year end and we are keeping our estimate of end-2017 gross reserves unchanged.

An additional source of replenishment of Ukraine’s
gross reserves could be an earlier announced confiscation of USD 1.1 bln in
cash allegedly misappropriated by former president Viktor Yanukovych, which is
allegedly being kept at accounts with state Oschadbank. However, it is not
clear whether and when such money, confiscated in late April, could be
reflected in Ukraine’s official reserves.