As promised, Ukraine will issue its first post-Maidan Eurobond this autumn in what is widely seen as a test of investors’ appetite for debt issuances by the war torn country.

Ukraine’s gross international reserves (GIR) have been rising this year and hit $18bn in August, which is about four months of import cover, or enough to ensure the stability of its currency. The hryvnia has proven to be a lot more stable than expected this year, hovering around the UAH25 to the dollar market.

The bond will be the first since the $3bn Eurobond issued in 2013 in a deal with Russia as part of a $15bn loan programme that Kyiv has since defaulted on. That deal was cut between Russian President Vladimir Putin and the since ousted Ukrainian president Viktor Yanukovych after the latter had rejected an EU trade deal.

The government has mandated JP Morgan, BNP Paribas and Goldman Sachs as bookrunners on the deal, according to people familiar with the situation, reports the Financial Times.

Analysts worry that raising money on the international capital markets will weaken the influence Ukraine’s chief donor, the International Monetary Fund (IMF), has over the government, which is dragging its heels on reforms. The parliament's autumn session started this week, but only one of the crucial reforms that the IMF is insisting on, a pension reform, will happen in this session. Ukraine has received one tranche of $1.5bn this year from the IMF, but it unlikely to receive any more unless more progress is made on reforms.

Ukraine Finance Minister Oleksandr Danylyuk told bne IntelliNews in May at the European Bank for Reconstruction and Development (EBRD) annual meeting that the country planned to tap the bond markets in the autumn. Earlier, Danylyuk said the value of the potential placement would be around $1bn (€0.93bn).

Timothy Ash, a senior sovereign strategist at BlueBay Asset Management, said in a note to clients on September 5 that Kyiv's move would be the first deal since the country's debt restructuring in 2015. "I guess, it will be sold as Ukraine's successful re-entry onto international capital markets, and showing just how far the country has come in the period since the Euromaidan revolution," he added.

Ash underlined that Ukraine's sovereign external debt has rallied 200bps across the curve over the past 3-4 months, and Ukraine's 10-year yields are around 7.45% at present.

"While securing market access is obviously a positive for Ukraine, as will liability management to smooth out the debt service profile, my long stated concern has been that coming too early to market would weaken IMF conditionality," Ash added. "Accessing the market means that Ukraine has little need for IMF cash, so as we enter the run up to elections in 2019, there will be even less pressure on policy makers to deliver on the IMF-reform agenda, which is already lagging."

Ukraine’s ability to raise money from bond markets was improved recently after credit rating agency Moody’s upgraded Ukraine’s rating to Caa2 from Caa3, and updated its outlook from stable to positive. It cited “structural reforms that, if sustained, are expected to improve government debt dynamics” as one of the main reasons for the decision.

The bond will arrive as several exotic issuers are hoping to tap the high appetite for high-yielding debt. Russia has issued $3bn this year and plans a $4bn bond swap this autumn. Belarus raised $1.4bn in a dual-maturity five- and 10-year tranche bond two months ago with the longer bond priced at 7.625%. And Tajikistan announced this week it will make its debut on bond markets this autumn.