Ukraine raises EUR 1 bln from 7-year Eurobond at 6.75% rate
14 June 2019
Ukraine’s Finance Ministry completed on June 13 the sale
of a seven-year, EUR-denominated sovereign Eurobond (UKRAIN) at a 6.75%
interest rate. The total amount outstanding is EUR 1 bln, while the total
subscription reached almost EUR 6 bln, MinFin reported the same day. The bond
will be redeemed in a bullet payment on June 20, 2026. This was the first
EUR-denominated issue in the last 15 years, MinFin highlighted. The proceeds
from the bond placement will be used to fund general government spending, it
reported.
Alexander Paraschiy: The
placement rate is broadly in line with our expectations of 7.0% or slightly below, so we deem
the transaction as successful for the government. The issue’s negative spread
to the USD-denominated Eurobond curve is 125 bps, which is fair, in our view.
The deal is positive for the budget’s and state debt’s short-term
sustainability, but it does not cancel Ukraine’s urgent need to continue
cooperation with the IMF in the mid-term.
The deal opens a window for the potential placement of
quasi-sovereign bonds, with the straightforward candidates for the new
placements being Naftogaz (NAFTO) and Ukrainian Railway (RAILUA).
With the attracted EUR 1 bln, we see Ukraine’s
gross international reserves rising in June by about USD 0.6-0.7 bln.
