Kyiv city may redeem UAH 875 mln in local bonds

The Council of the city of Kyiv (CITKIE) decided on July 30 to approve postponing by one year the maturity of its hryvnia-denominated local bonds of three issues (“F”, “H” and “G”) worth UAH 5.4 bln totally from their 2015 due date, the Interfax-Ukraine news agency reported the same day. This creates the legal basis for Kyiv city officials to negotiate the extension with bondholders.

City authorities are also considering redeeming UAH 875 mln out of this UAH 5.4 bln sum on a timely basis, as the Kyiv budget is enjoying a surplus this year. Initially, they didn’t foresee any funds for debt repayment this year, having scheduled only debt service payments.

In a separate Interfax news item, Kyiv budget generated 1H15 revenue of UAH 12.17 bln, or 2.7% higher than planned. Following this performance, the Kyiv City Council revised the same day the city’s budget revenue to UAH 23.17 bln (from UAH 22.82 bln). It increased slightly its spending plan to UAH 21.36 bln from UAH 21.34 bln, leaving a surplus, but still not accounting for the possible redemption of UAH 875 mln in local bonds.

Meanwhile, the Finance Ministry is responsible for negotiating with creditors the restructuring of USD 250 mln in Kyiv city Eurobonds maturing in November 2015 and USD 300 mln due in July 2016.

Roman Topolyuk: The 2014-2015 hryvnia depreciation have dampened the Kyiv government’s outlook of repaying dollar-denominated Eurobonds, as the city’s revenues are generated in hryvnia. Despite this, the municipal borrower has demonstrated discipline and solid performance in terms of balancing budget inflows and outflows, as well as servicing debt.

Kyiv is largely relying on state support in terms of redeeming its Eurobonds and obtaining new terms with bondholders. These new conditions will depend on the outcome of MinFin talks with its creditors on debt operation.