Ukraine's cabinet prepares bond issues to offset the loan to renewable energy suppliers

By bne IntelliNews January 22, 2021

Ukrainian PM Denys Shmyhal has directed the finance, energy and economy ministries to raise funds for the repayment of green energy suppliers through the issue of state bonds, which to be called "green bonds", the news site reported on January 20. 

Last year, the government-mandated industry operator, Guaranteed Buyer, bought inefficient clean electricity, resulting in the misallocation of the market. The Guaranteed Buyer bought only UAH2.8bn ($99.4mn) worth of renewable energy for UAH24.6bn in total during March-July of 2020.

“Ukraine’s 2021 state budget does not explicitly foresee an issue of any state debt to repay the accumulated green energy arrears, so it is not clear on what basis the government is going to issue its “green bonds”. Nevertheless, such an issue is possible, and in case it’s done, it will significantly improve the liquidity of green energy producers, including DTEK Renewables (DTEREN). This supports our view that DTEREN bonds, yielding currently 10.4% to their maturity in 2024, are the most attractive instrument in Ukraine’s fixed income universe,” an analyst at the Kyiv-based Concorde Capital brokerage said in a research note.

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