Ukraine confirms plans to place Eurobond in 2H17

Ukraine might place a new round of Eurobonds already this fall, said Finance Minister Oleksandr Danylyuk during a visit to Washington, the Wall Street Journal reported on April 20. The potential placement might be in September-October and the sum of the issue will be around USD 1 bln, he said.

Danylyuk said he also expects the next IMF loan tranche – estimated at USD 2 bln – already in June-July, following parliamentary approval of pension reform and the launch of a farmland market. This year’s IMF memorandum mentioned a potential Eurobond placement of USD 1 bln by the end of 2017.

Alexander Paraschiy: Danylyuk has a political responsibility to maintain an optimistic tone for Ukraine fulfilling the IMF program for USD 5.5 mln in loan money earmarked for this year. Indeed he is more hopeful than we are for parliament fulfilling the key IMF demands by July (pension reform and farmland market launch). He also believes in demand for Ukrainian Eurobonds just two years after the distressed debt restructuring. We see it as possible, but the interest rate of such a placement could be shamefully higher than the rate for Kernel’s recent placement or the rate for the upcoming MHP placement.

If the government fulfills its optimistic vision, Ukraine will be able to meet the IMF target on gross reserves accumulation of USD 21.8 bln by the end of 2017. We are more cautious on this front as well, estimating USD 19.5 bln in 2017 gross reserves due to the potential for disruption of the IMF program.