Government Plans 384m CHF Eurobond.

The Cabinet published a resolution yesterday outlining its plan to sell 384m Swiss francs ($306 million) of 12-Year Eurobonds in September. The bonds will have a par value of 100,000 CHF, a 3.5% coupon paying semiannually and a put option exercisable on Sept. 15, 2009, giving bond holders the option to cash out early. The bonds will be offered at a 2.6% discount to par value. Oleksandr Klymchuk: The detailed announcement suggests the Cabinet has already negotiated the placement. This is Ukraine’s first issue denominated in CHF and the first with such a low coupon, although the discount and put options substantially increase the cost of borrowing. The terms imply a yield to maturity at 3.77% and a yield to put at 4.435%, or respectively 130 bps and 195 bps over the CHF benchmark yield curve. The latter is in line with the spread of Ukrainian Eurobonds maturing in 2015 over the Euro benchmark yield curve (190-195bps) and is wider than the spread of USD-denominated Eurobonds maturing in 2013 over the US Treasury yield curve (180-183bps). We expect the government to sell about another $500m of Eurobonds by the end of the year.