Finance Ministry issues third tranche of VAT bonds for UAH 8.3 bln

Ukraine’s Finance Ministry yesterday issued a UAH 8.3 bln (USD 1.05 bln) third tranche of special UAH sovereign bonds to cover VAT arrears to corporate exporters. According to the statement, 117 companies/VAT payers received bonds in the third tranche. Together with the first two tranches, current outstanding VAT bonds (at par) total UAH 10.4 bln. Overall, the Finance Ministry plans to issue VAT bonds for some UAH 17 bln. Mykyta Mykhaylychenko: We expect the increased volume of VAT bonds to push the UAH sovereign yield curve up from its current levels of 10%-13% and keep demand for regular sovereign UAH paper of longer maturities at virtually zero. Today’s regular primary auction of UAH sovereign bonds will provide more precise estimates of future yield movement.