Ukraine raises UAH 25 bln from local Eurobonds

25 March 2020

Ukraine’s Finance Ministry raised USD 801.6 mln and EUR 75.7 mln (UAH 24.8 bln in the equivalent) at its weekly bond auction on Mar. 24 after raising USD 71.6 mln (UAH 1.9 bln in the equivalent) at the auction last week. The auction receipts came from the placement of 3M USD-denominated bonds and 14M EUR-denominated bonds.

 

MinFin satisfied eight out of ten bids for 3M USD-denominated bonds with a weighted average interest rate of 3.0% (vs. 3.5% for 10M USD-denominated bonds placed last week). Two bidders bought 14M EUR-denominated bonds at 2.2%.

 

Evgeniya Akhtyrko: The record-high auction receipts imply that the government’s needs in financing the budget deficit are skyrocketing. The severe lockdown measures introduced at the end of last week in its attempt to contain the coronavirus infection resulted in a shutdown of many businesses. Meanwhile, those deemed to be providing essential goods and services saw their activity decline. In all, that is certain to shrink budget revenue collections.

 

The government made a significant effort in boosting auction receipts this time. To accomplish that, the foreign currency resources of state-owned companies and state-owned banks are likely being mobilized for purchasing these bonds. Meanwhile, financing budget deficit through the issue of local Eurobonds is a short-term fixing. The placement of 3M local Eurobonds for USD 800 mln looks especially worrisome, as the government is not likely find additional resources neither for redeeming the bonds nor for rolling them over in three months. 

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