Ukraine has issued $350 million in Eurobonds with a yield of 9.75 percent, due in 2028, according to a statement by the Finance Ministry of Ukraine on March 13.
This offer follows on from another issue in October, when Ukraine raised $1.25 billion in 2028 Eurobonds with a 9.75 percent yield, bringing the total balance of such notes to $1.6 billion. Also in October, Ukraine issued $750 million in five-year Eurobonds.
JP Morgan Chase organized yesterday’s offer.
According to Concorde Capital economist Alexander Paraschiy, Ukrainian Eurobonds traded at 101 percent of par on March 12, making it attractive for investors to acquire additional notes at their par value.
Between the issue and the National Bank of Ukraine’s net purchase of $212 million in U.S. dollars last week, Ukraine will likely boost its gross international reserves by up to $400 million in March, according to Paraschiy.
He added that the Finance Ministry most likely approached the holders of Oschadbank’s 2023 Eurobond, which earlier this week received $453 million in amortization and coupon payments, to see if they would reallocate their funds into Ukraine’s sovereign notes.
If this is the case, the Finance Ministry can place more Eurobonds in late April when Ukreximbank’s 2022 bond holders receive their total $411 million in amortization and coupons.
Separately, the Finance Ministry also raised Hr 3.5 billion (about $130 million) at its weekly bond auction on March 12. The issues included hryvnia bonds with maturities ranging from four months to two years, as well as two-year dollar bonds and nine-month Eurobonds.
Last week’s auction raised a total Hr 5.7 billion ($210 million).
“The demand for hryvnia-denominated bonds declined from the previous week,” said Concorde Capital economist Evgeniya Akhtyrko. “However, bidders revealed that they are most interested in bonds with the highest term of maturity.”
“This is likely to indicate that market participants expect the National Bank of Ukraine to lower its key policy rate at the monetary policy committee’s meeting on March 14, and the Finance Ministry will lower interest rates on the primary bond market afterwards,” she added.
Clearstream enters Ukraine
Also this week, the National Bank of Ukraine signed a correspondence agreement with international securities depository Clearstream, the first such agreement in Ukrainian history.
Clearstream, based in Luxembourg, holds securities across all asset classes and allows clients to trade securities quickly and easily. It also provides securities contract settlement services and issues Eurobonds.
According to the NBU, the agreement will greatly simplify the ability of foreign investors to acquire Ukrainian government bonds and reduce the time and cost of transactions. At the same time, the bank said that this relationship will increase the attractiveness and liquidity of the government securities market in Ukraine.
“Correspondent relations with the international depository will allow Ukraine to accelerate integration into the global capital markets,” NBU Deputy Governor Oleh Churiy said in a statement.
