Ukraine road agency places 7Y USD 700 mln Eurobond

Ukraine’s State Road Agency Ukravtodor (UKRAVT), the
state body that manages Ukrainian roads, priced a USD 700 mln Eurobond on June
17. The state-guaranteed bond with ultimate maturity in June 2028 and repayable
in four equal semi-annual tranches starting December 2026, was issued at par
price with a coupon rate of 6.25%, or 56 bps over the sovereign curve.
Ukravtodor has become among the biggest state entities in terms of funds
spending (UAH 97.3 bln spent in 2020, including UAH 68.8 bln of state budget
money) and a flagship entity participating in “big construction” project
promoted by president Zelesnky. The entity is a division of the Infrastructure
Ministry.

Alexander Paraschiy:  As
Ukravtodor is a part of Ukraine’s government and the bonds have a state
guarantee, the risk of this bond is identical to the sovereign one. The only
additional risk for this bond is that its issuer, controlling large outlays for
infrastructure spending, could be a subject of various corruption scandals.
Such reputation risk on the part of the issuer, however, won’t affect its
ability to service the bond. For that reason, the UKRAVT bond looks like a more
attractive alternative to Ukraine’s sovereign bonds maturing in 2027-2028.