Ukraine government is close to issuing new Eurobonds

The Ukrainian government is actively preparing to
place international Eurobonds as soon as possible, the Interfax-Ukraine news
agency reported on Oct. 22, citing anonymous sources. This information was
later confirmed by acting Finance Minister Oksana Markarova, who acknowledged
that a government delegation will launch a roadshow to market the new bond
issue on Oct. 23. The government is considering an issue of 5-year or 10-year
bonds, according to Interfax-Ukraine. Ukraine’s 2018 state budget assumes USD 2
bln in financing from international bonds.

Recall, Ukraine placed USD 725 mln in
short-term international bonds on Aug. 23, maturing in late February 2019, at
an effective rate of about 9.2%.

Alexander Paraschiy: Now that
the IMF confirmed its intention
to offer a new loan program to Ukraine, the government has a realistic chance
to raise private debt abroad. We see the rate for the 10-year bond being
between 8.5% and 9.0% and Ukraine will be able to raise USD 2 bln or slightly
more. That will be enough for the government to fully finance the 2018 budget
deficit, as well as slightly improve the country’s gross reserves.

Most likely, some of the quasi-sovereign corporate
issuers will immediately follow MinFin with their own Eurobond placements. The
leading candidates are Naftogaz (NAFTO) whose management has announced its
intention to raise USD 0.5-1.0 bln, as well as Ukrainian Railway (RAILUA),
which needs to raise funds to refinance a USD 0.3 bln amortization of its
existing Eurobond in 2019.