Ukraine holds biggest USD bond placement since May

Ukraine’s Finance Ministry raised USD 252 mln with a November 12 domestic placement of USD-denominated bonds, the largest since May. The government raised USD 232 mln from the placement of 13-month bonds at a 7.88% yield, USD 10 mln from the sale of five-month bonds at a 7.75% yield and USD 10 mln from the sale of 20-month bonds at an 8.75% yield.

Alexander Paraschiy: MinFin finally managed to sell large lot of state securities after more than five months of relatively scarce demand for domestic USD bonds. Apparently, the placement was targeted to refund a USD 278.6 mln bonds redemption maturing on November 13 and in fact it covered a large part of internal USD repayments due this month (USD 364 mln in total).

We doubt this success will break the trend of low demand for USD-denominated state securities given the high yields for Ukraine’s Eurobonds (nearly 10% on 10-year bonds, 12% for two-year notes). And very likely the placement was primarily due to “friendly demand” from state banks. Nevertheless, the placement has slightly reduced pressure on gross foreign reserves that we expect will slide by at least USD 1.5 bln this month to nearly USD 19.0 bln (2.3 months of imports).