ICU Research: Ukraine issues new US-backed bond at 1.847%

May 27, 2015 - Cbonds

The new US-backed bond issue announced a month ago, following guarantee agreements signed earlier this month, was completed yesterday at a 1.847% yield and a 32bp spread to the benchmark. Last year, Ukraine issued a similar bond a few days after the offering was announced at a 28bp spread to the benchmark, at 1.844% coupon yield, as there was significant demand for the bond.

Investment implications: The spread was very similar to last year's UKRAIN 1.844% '19 offering. Bloomberg had reported that the spread would be as high as 35-40bp. Although Ukrainian risks are higher than they were last year because of the ongoing conflict in the Donbas region as well as difficulties in the debt restructuring talks, the new 5-year bond spread is only 3bp higher than the previously issued bond's yield. This surprising development should strengthen the MoF's position not only in the restructuring talks but also for the upcoming EFF program revision in June.

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