Ukraine places 5-year $1bn Eurobonds under US guarantees at 1.471% per annum

By bne IntelliNews September 23, 2016

Ukraine has placed five-year $1bn Eurobonds under US guarantees at the yield rate of 1.471%, or 30 basis points (bp) above the US Treasury bond curve, financial ministry officials in Kyiv said on September 22.

This was the third placement of US-guaranteed bonds, with the first placement of five-year $1bn in 2014 (at a rate of 1.844%, or 28 bp spread to US bonds) and in 2015 (at 1.847%, or 32 bp spread). The organisers of the placement are Citi, JP Morgan and Morgan Stanley.

The placement was expected after the decision of the International Monetary Fund (IMF) executive board on September 14 to release a further $1bn tranche to Ukraine from the lender’s stalled $17.5bn bailout package, ending an almost year-long halt in funding.

“As part of the program, Ukraine may also receive a €600mn loan from the European Union soon, providing providing the EU is satisfied with recent progress on Ukraine’s energy legislation (including yesterday’s approval of a new law on the utility sector regulator and a draft law on electricity market reform, passed in the first reading),” Alexander Paraschiy at the Concorde Capital brokerage in Kyiv wrote in a note to clients on September 23.

According to Paraschiy, proceeds from the bond placement will enable the government to finance the budget deficit, as well as boost Ukraine’s gross international reserves, which we expect will reach $15.4bn as of end-September (up from $14.1bn as of end-August).

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