MinFin calculates first payment under Ukraine GDP warrants

Ukraine’s finance ministry announced on May 17 that
its first payment under GDP-linked securities, due on May 31, will amount to
USD 40.75 mln. In this way, the debut payment under Ukrainian GDP warrants will
be USD 1.258% of their notional amount.

Alexander Paraschiy: Recall, the
GDP-linked securities for a notional amount of USD 3.24 bln were exchanged for
a part of government Eurobonds and some quasi-sovereign debt in late 2015 and
early 2016. All the other government debt was then exchanged into new Eurobonds
with a coupon rate of 7.75%. In this way, by issuing the GDP-linked securities,
the Ukrainian government has saved about USD 1.4 bln on coupon payments over
the last 5.5 years, which is much more than the USD 0.04 bln payment due in
May.

Starting 2023, the payments under Ukrainian warrants
are likely to significantly increase, providing this year’s real GDP growth
will be near 4% and Ukraine will start showing consistent economic growth after
that. This keeps us optimistic about the mid-term price growth potential of the
warrants.