Ukrzaliznytsia gains 15% hike in cargo rail transit rate

Ukraine’s Infrastructure Ministry issued a May 4 decree boosting the rates for railway cargo transit by 15% as of April 30, Interfax-Ukraine reported the same day. The main benefactor is Ukrzaliznytsia (RAILUA), which is Ukraine’s monopoly provider of cargo rail transit.

Roman Topolyuk: The hike was enacted by Ukraine’s new infrastructure minister despite fierce resistance by the industrial lobby that relies on rail to transport its raw materials. The rate increase will offset the depreciation of the hryvnia, which has fallen an average of 15% so far this year. This proves the state company has the ability to lobby and pass the cost of currency depreciation onto its customers.

The spread of Ukrzaliznytsa’s Eurobonds has tightened to 326 bps during two last months from 460 bps. Our view on the bonds remains positive, though the upside might be limited.