, the Ministry reported on its Facebook page. Coming after last week’s settlement of the government’s $1.25 billion Eurobond issue at a historically low interest rate of 6.876%, yields were virtually unchanged yesterday. Unchanged were 6-month bonds at 9% and 1-year bonds at 11.2%. Three-year bonds moved up two basis points, to 12.3%.
the NBU said. The following amendments were introduced: “transactions to distribute income on and redeem Eurobonds as well as other issuer transactions for the purpose of placing such securities were removed from the list that is subject to a EUR 2 million annual limit; foreign currency can be bought to be deposited on the own account of the issuer with a Ukrainian bank until the maturity date of liabilities under Eurobonds.”
, the Ministry of Finance announced on Friday. Joint Book runners included BNP Paribas, Deutsche Bank, Goldman Sachs International and JP Morgan. “The funds were transferred to the account of the State Treasury of Ukraine and will be used for general budgetary purposes,” said the Ministry.
the Ministry reported on its Facebook page. Yields in hryvnia reflect the Central Bank’s increase in the nation’s prime rate 10 days ago to 7.5%. The yields were: 6-month – 9%; 1-year – 11.2%; 1.5 year – 11.3%; 2-year – 11.96%; 3-year – 12.28%. In the foreign currency placements, the Ministry sold $21 million worth of 1-year dollar bonds at 3.7% and €42 million worth of 1-year euro bonds at 2.5%.
reports Reuters. But the lengthy, London-based story starts: “Fund managers are trimming exposure to Russia and Ukraine on fears that years of tensions could finally erupt into outright war, bringing economic ruin for Ukraine and more sanctions on Russia.” On Ukraine, Reuters notes: “The volume of local bond holdings held by foreign portfolio investors has been declining since late March.”
, or IGLBs, Danylo Hetmantsev, head of the Rada Committee on Finance, Tax and Customs Policy, wrote after Tuesday’s hryvnia bond auction sold only the equivalent of $7.7 million. Writing on his Telegram channel, Hetmantsev predicted: “As soon as the situation at the border stabilizes, investors will start buying IGLBs again.”
. Of the $17.8 million put up for auction, only 28% were sold. The Ministry reported that 1-year bond sold unchanged with a yield of 10.75%, the 18-month bond sold also unchanged with a yield 11.1%. The two-year dollar bond sold with a yield of 3.9%. Dollar bond sales totaled $49 million, 86% of total sales yesterday.
, ICU has reported. The Kyiv investment house wrote: “Sentiment changed at the end of the week when J.P. Morgan announced that it was including the Ukrainian note due 2025 to the watch list to be added to the GBI-EM [Government Bond Index-Emerging] index.”
at the Finance Ministry’s weekly auction. The auction nearly covers repayment of $325 million scheduled this week. With yields unchanged, investors bought $49.6 million of 1-year bonds at 3.7%, and $106.8 million of 2-year bonds at 3.9%, the Ministry has reported on Facebook.
to 7.98%, and on 1-year bonds by one basis point, to 10.74%. To sell $34.6 million worth of 2-year bonds, the Ministry raised the yield by 10 basis points, to 11.8%, according to the Ministry’s website. In general, the weighted average rate at yesterday’s auctions fell to 10.67%, from 11.64% one week ago. Last week, the Ministry sold the equivalent of $232 million, reports ICU.
DTEK Group, Ukraine’s largest private power producer, called on the government yesterday “to abolish price caps, which are an obstacle to the liberalization of the electricity market.” The company cited the example of the EU, where the cost of electricity production during peak loads can increase significantly. DTEK said: “We call on the government to intervene in the situation and immediately hold an anti-crisis headquarters with the participation of the Prime Minister.”
Ukraine’s Energoatom will soon stop sending spent nuclear fuel to Russia for processing and storage, Petro Kotin, the company head, said yesterday. In July, the Centralized Spent Fuel Storage Facility will open, he said. At the same, time, Energoatom is completing a 43 km rail connector to the facility, built by Holtec, a US company, near Chornobyl. Nuclear supplies about half of Ukraine’s electricity.
With demand strong for Ukrainian government bonds, the Finance Ministry depressed yields on all five hryvnia bonds sold at yesterday’s auction, the Ministry reported. With yields dropping from six to 44 basis points, the final range was 9.15% for 3-month bonds to 12.05% for 3-year bonds. The government sold hryvnia bonds for the equivalent of $213 million. Also posting results on Facebook, the Ministry says it sold $42 million worth of 2-year dollar bonds at 3.9% and €70.5 million worth of 1-year euro bonds at 2.5%.
Looking beyond the bland public statements surrounding Ukraine’s recent suspension of talks with the IMF, Anders Aslund, a veteran IMF observer, writes in an Atlantic Council blog: “No agreement was concluded between the IMF and the Ukrainian government recently because they fundamentally disagree about pretty much everything.” Offering the only way forward, Aslund writes that President Zelenskiy “urgently needs to refocus on the anti-corruption messages that enabled him to win landslide election victories in the presidential and parliamentary votes of 2019.” Without real actions, he writes, the IMF “has no compulsion to offer credits to the dishonest.”
DiDi, China’s giant online taxi service, plans to launch this year in Ukraine, reports AIN.ua news site. With 550 million users, tens of millions of users and billions of dollars in revenues, DiDi entered Russia last year, a first step in a plan to expand across Eastern Europe. Last week, DiDi posted on the GRC job search website that is looking for a manager to launch in Ukraine.
DiDi will compete with Bolt, Uber and Uklon for Ukraine’s taxi market, estimated by Uklon at $800 million a year. Uber, the first mover in Ukraine, now operates in seven Ukrainian cities and claims that 4.3 million Ukrainians have downloaded its mobile app. Uklon operates in 19 cities and claims nearly 3 million users. Bolt operates in 10 cities and claims 3 million users.
Taxi services got a boost yesterday when the Rada overwhelmingly approved a bill raising the penalty for drunk driving to $608. For repeat offenders, the fine is doubled to $1,216, licenses are suspended for three years and vehicles can be seized. The Rada also tripled the fine – to $60 – for drivers caught breaking the national speed limit of 50km per hour in populated areas.
McDonald’s Ukraine plans to expand a pilot program of restaurant waste recycling to all 96 restaurants in the country by the end of this year, the company announced yesterday. As part of a worldwide McDonald’s drive to switch from plastics to paper by 2025, the restaurants in Ukraine switched last year to paper cups for drinks and paper boxes for salads.
Kyiv’s 11th Regus office work space opens in Podil next month, reports the parent company, Luxembourg-based IWG Plc. Despite last year’s economic recession, total occupancy of the 10 existing Regus work spaces in Kyiv is 78%, Yulia Lytvynenko, Ukraine director of IWG, tells Interfax-Ukraine. Predicting that several large leases will be signed in coming weeks, she predicts that the overall occupancy will rise “to 83% by March.” The new Regus will occupy three floors of the new Volodymyrsky business center on Poshtova Square, near Poshtova Metro station and the Kyiv Funicular. Lytvynenko says: “The highlight, surely, will be beautiful views of the Dnipro River on the one hand and the [Volodymyrska Hill] park on the other.”
Kyiv’s Sikorsky Airport is to add 500 meters to its runway, allowing Wizz Air, its primary user, to use larger jets. By moving to Airbus 321 jets, Wizz Air says it can reduce frequencies and noise in the capital’s Zhuliany neighborhood. Wizz Air has ordered 190 Airbus 321s, which carry 30% more passengers than the Airbus 320s, currently the workhorse of Wizz Air.
Mayor Klitschko signed an order last week for design work to start on a 5-year upgrade of the airport. By expanding the runway to 2,810 meters, upgrading lights and adding an instrument landing system, the airport is to be certified to land jets in bad weather, avoiding diversions to Boryspil. Ukraine’s second busiest airport, after Boryspil, Sikorsky handled 2.6 million passengers in 2019. The City Council is mulling a second expansion: increasing the airport’s territory by 5%, to 278 hectares.
German and Biden Administration officials are discussing a package of measures that would allow the Russia-German gas line to open, but protect Ukraine’s security concerns, according to a Financial Times story headlined: “Germany aims for new deal with Washington on Nord Stream 2.” One proposal would empower Germany – or a German-American commission — to shut down the Nord Stream 2 pipeline if Russia stopped sending minimum gas flows across Ukraine, increasing risk of an all-out Russian military attack.
“As Berlin seeks solutions, early signs from Washington indicate that the Biden administration is seeking to defuse the Nord Stream 2 debate,” the FT writes. “Two knowledgeable sources said [US Secretary of State Antony] Blinken has demonstrated a willingness to minimize sanctions.” Bloomberg later posted a matching story yesterday, headlined: “Germany Seeks Deal With Biden on Controversial Pipeline.” Bloomberg quotes Mark Helfrich, a Bundestag member from the ruling Christian Democratic Union, saying: “German, EU and U.S. officials are in talks about a package of measures which seeks to enhance Ukrainian stability and European energy sovereignty.”
A cold weather spike in electricity consumption, a lack of coal, and power plant breakdowns are forcing Eastern Ukraine to import electricity from Belarus and Russia and Western Ukraine to import electricity from Slovakia, Romania and Hungary, reports Ukrenergo, the national power distribution company. As of Monday, 19 thermal power plants were offline, pulling 6,270 MW out of the system, Volodymyr Kudrytskyi, Ukrenergo’s chairman told a forum in Kyiv yesterday.
Electricity consumption last week was 6.5% more than forecast. But coal reserves fell to one third of required minimums. Thanks to imports, Kudrytskyi does not predict immediate power shortages.
US support to Ukraine for combatting the pandemic totals $48 million over the last year, Kristina A. Kvien, US Chargé d’Affaires, told the Coronavirus Forum on Monday. She said the money has gone to bolstering Ukraine’s health system, supporting small businesses, and countering “COVID-related disinformation that threatens our collective ability to get this pandemic under control.”
Germany is proving Ukraine with a €13.1 million medical care grant that includes supplying equipment for outpatient diagnosis and treatment of coronavirus. This grant, and a second one for €23.5 million are largely focused on Ukraine’s war affected southeast where the money is to go for upgrading hospitals and building housing for internal refugees.
Talks with IMF will be delayed to the spring, making a staff level agreement in May the optimistic scenario, Liga.net reported in a lengthy story, citing unnamed Rada members and Central Bank officials.
Dragon writes: “The government has sufficient liquidity buffers to proceed without IMF financing until end-May (assuming full rollover of domestic debt), but faces an increase in fiscal funding needs in 2H21, especially in September, the peak of external debt redemptions ($2.2bn), and December, due to seasonal expansion of the budget deficit (at least half of $8.4bn full-year gap). Thus, authorities would need to secure IMF financing by August at the latest in order to facilitate funding from other sources (IFIs, Eurobond market, foreign inflows into UAH bonds).”
The Finance Ministry increased 2.5-fold its sale of bonds yesterday, but kept yields largely unchanged at the weekly auction, according to results posted on Facebook. Of the total $467 million in dollars and hryvnia equivalent sold, the 16-month hryvnia bond was the big seller, accounting for 31% of all sales and going for a weighted average of 11.15%. Of the six bonds sold, interest rates ranged from 9.89% for 6-month bonds to 12.5% for 6-year bonds. In addition, the Ministry raised $207 million through the sale of 14-month dollar bonds for 3.9%.
With snow and sub-freezing temperatures forecast through Friday, restrictions on trucks entering Kyiv are expected to continue off and on. At a peak, 3,000 trucks were stopped outside the capital, with their drivers waiting for roads to clear. At eight entry points to the city, the State Emergency Service pitched warming tents, offering hot tea and biscuits. Last night, after rush hour traffic jams subsided, trucks were allowed into the city, alleviating fears of shortages in supermarkets.
Due to the cold temperatures, coal reserves at thermal power plants fell sharply during the first week in February, hitting 57% of minimum, required volumes, Ukrenergo reported yesterday. To fill the gap, hydro plants on the Dnipro cascade increased output by 27% during the first week. Energoatom is advancing by several days the scheduled relaunching of reactor No. 2 at Khmelnitskiy Nuclear Power Plant.
DTEK Energy has announced a tentative agreement with bond and bank debt holders to restructure much of its $2 billion bond and bank debt. After 10 months of negotiations, the deal’s center piece is exchanging guarantees from DTEK Oil & Gas Receivables for $425 million of new DTEK Oil & Gas notes. Listed on the Irish Stock Exchange, these bonds would pay 6.75% cash interest semiannually and mature Dec. 31, 2026. As part of the deal, DTEK Energy will appoint an independent supervisory board member, from a list of three candidates offered by creditors, who will have a veto right on M&A and excess capital expenditures.
Analysts generally welcomed the proposed exit from a default that rattled investors last March:
Ukraine’s economic activity in the fourth quarter of last year was only down 1% yoy, far better than the forecast drop of 3%, Economy Minister Ihor Petrashko told reporters Tuesday at the Ukraine 30 Coronavirus: Challenges and Responses Forum in Kyiv. “Currently, the conditions for economic recovery, in principle, are quite favorable,” he said. “Our forecast for 2021 – an increase of 4.6% – we retain unchanged and [see as] quite likely.”
Adamant Capital wrote: “The updated terms look significantly better than those disclosed at the end of November…We confirm our ‘Buy’ recommendation.”
Ukraine’s steel production could increase by as much as 6% this year, to 21.8 million tons, according to a study prepared by the GMK Center, a metals industry analytical and consulting group: “Forecast of Steel Production in Ukraine in 2021.” By reorienting exports to China, Turkey and Southeast Asia, Ukraine’s steel sector ended 2020 recording a 1% drop in production, but rising from 13th to 11th place in the ranks of world steel producers. “Ukrainian steelmakers begin 2021 with the best conditions in the markets over the past 12 years,” the report says. “Demand for steel in the EU and MENA region has already fully recovered, while China will maintain low export volumes.”
Concorde Capital wrote: “The updated DTEK’s offer provides more clarity about minimum payments to bondholders…the updated restructuring terms look balanced.”
Ukraine’s full bore coronavirus vaccination campaign may be delayed from March to April because of government paper work delays in China and Ukraine, reports Reuters. Last week, Ukraine’s Lekhim asked Ukrainian authorities’ permission to delay to April imports from China of the first shipments of 1.9 million Sinovac vaccines, according to a letter seen by a Reuters reporter in Kyiv.
Dragon Capital wrote: “The updated restructuring terms mark a significant improvement over the previous version…The new proposed DTEK Energy bond structure is also simpler than the previous variant and likely to have its own dedicated Bloomberg calculator, facilitating bond trading and improving its overall liquidity.”
Vaccinations are scheduled to start Monday, drawing on an expected shipment of 117,000 Pfizer vaccines. President Zelenskiy talked on the phone Monday afternoon with Albert Bourla, CEO of Pfizer Pharmaceutical Corporation, based in New York. “Ensuring vaccination of the population of Ukraine with a safe certified vaccine is one of our priorities,” Zelensky said. The President’s website reported: “The Board Chairman of Pfizer promised to do everything possible to ensure that Ukraine receives the first batches of vaccine under contract as soon as possible.”
All Ukrainians should have access to vaccines by the end of this year, Health Minister Maksym Stepanov told ICTV’s Freedom of Speech program. He vowed: “We want to ensure that 100% of the population have access to a COVID-19 vaccine by the end of 2021.” Separately, President Zelenskiy addressed popular skepticism of the vaccines, saying Monday: “We all need to show vaccination live on TV. There’s no other choice than to lead by example.”
Ukraine’s turn last month to Britain’s Crown Agents to buy coronavirus vaccines illustrates the difficulty in breaking ingrained traditions of drug profiteering at the Health Ministry, Pavlo Kovtoniuk, Head of the Health Economics Center at the Kyiv School of Economics, writes in an Atlantic Council piece: “Ukraine signs vaccine deal, but delays highlight urgent need for healthcare reform.” Noting that Crown Agents temporarily procured drugs for Ukraine 2016-2018, Kovtoniuk, who was Deputy Health Minister at the time, wrote “For the second time in just over five years, the involvement of international partners was necessary to rescue Ukraine’s medical procurement processes from corruption.”
The vaccination of 10 million Ukrainians at risk – about one third of all adults – is a condition for Ukraine receiving a $30 million World Bank loan this spring under its Covid-19 Emergency Response and Vaccination in Ukraine project, the Finance Ministry reported Tuesday. The money is to be part of a $90 million World Bank loan for Covid testing and vaccinations. Deputy Finance Minister Roman Yermolychev said: “We must understand that these are loans, and therefore their disposal must be reasonable and rational. to fulfill all obligations as much as possible in order to improve the investment microclimate in Ukraine.”
Ukraine is preparing to negotiate Free Trade Agreements in 2021 with China, Vietnam, Indonesia, Egypt and Jordan, said Ihor Petrashko, Minister of Economic Development and Trade. “These are important markets for Ukrainian products as part of expanding our export opportunities.”
Tripling Vietnam-Ukraine trade to $1 billion by 2023 and forging a bilateral free trade pact were two goals set at a meeting Monday in Kviv between Nguyen Hong Thach, Vietnam’s ambassador to Ukraine, and Taras Kachka, Ukraine’s Deputy Minister for Economic Development and Trade. Both officials agreed to expand air links and to speed up establishment of a Vietnam House in Kyiv and of a Ukraine House in Hanoi, reports Vietnam News Agency. By contrast, China-Ukraine trade is believed to have hit $14 billion this year.
A recently agreed $1 billion “linked loan” from China “is not a victory,” Oksana Markarova, Ukraine’s former Finance Minister and future Ambassador to the US, wrote in her blog for Ekonomichna Pravda. Noting that the money will be used to fund the Kyiv Ring Road and for Kremenchuk’s new bridge over the Dnipro. She says this kind of loan may require Chinese workers, materials, technology and construction companies. Markarova warned, “The process and results of Ukraine’s use of the tied loan from China are expected to be in line with the creditor’s vision and the approaches of China and the Chinese Communist Party.”
In advance of the January 20, 2021 inauguration of President-elect Joe Biden, Washington-based Radio Svoboda continues to investigate Ihor Kolomoisky’s investments in the US with a story headlined: “Ukrainian Tycoons Selling U.S. Property Amid Foreclosure Proceedings, Court Documents Show.” According to court documents filed Christmas eve, Optima Ventures, the U.S. real-estate holding company owned by Kolomoisky and Hennadiy Boholyubov wants to sell an office building and a stake in a hotel in Cleveland. Reporter Todd Prince writes: “Separately, the Justice Department is seeking the forfeiture of two commercial buildings owned by Optima Ventures in Louisville, Kentucky, and Dallas, Texas.”
President Zelenskiy yesterday suspended the Chief Justice of the Constitutional Court through February after he failed to appear Monday at police inquiry into a bribery charge. The Justice, Oleksandr Tupytsky, is seen as the organizer of court decisions two months ago to dismantle anti-corruption agencies in Ukraine.
Concorde Capital’s Zenon Zawada writes: “On the surface, it’s impressive that the Prosecutor General’s Office is pursuing this criminal case against Tupitskiy…We are confident that Tupitskiy won’t be prosecuted for any alleged crimes because of the “krysha” [political cover] that he enjoys, which likely extends into the Prosecutor General’s Office. Any measures it takes against him are merely for show.”
Signaling a revival of Ukraine’s aircraft building industry, the Defense Ministry has ordered three An-178-100R military transport jets from Antonov, the first such order since Independence in 1991. Powered by two domestic turbojet engines, this version of the An-178 can carry 18 tons of cargo, cruise at 825 km/h, and fly a maximum of 5,000 km. For comparison, the flight distance between Uzhgorod and Kharkiv is about 1,000 km.
Next year, Ukraine will establish a state airline based on a fleet of Antonov regional jets, President Zelenskiy promised yesterday at the military cargo jet signing ceremony. Yuri Guzev, the new general director of UkrOboronProm said: “We expect to sign new government contracts for the manufacture of An-178 aircraft from 2021.” Last month, the Cabinet of Ministers signed off on a 10-year, $1.4 billion program to develop and modernize Ukraine’s aviation industry.
The Dnipro shipping season is being extended to Jan. 15, an unprecedented extension into mid-winter. Studying long term weather forecasts, the Maritime and River Transport Service on Monday made its third shipping season extension since November 11. With the latest extension, shippers will get two extra months of use of the river’s six locks. Closing the river involves pulling out hundreds of buoys.
The Finance Ministry made another high volume government bond sale yesterday — $874 million in equivalent. With this auction, the Ministry has raised nearly $3.5 billion in the last three weeks – more than the $2.9 billion in the first 11 months of this year.
For the eight different hryvnia bonds offered, yields have changed little since last week, ranging from 10% for 3-month bonds, to 12.25% for 5-year bonds. With 3-month bonds in dollars offering a 2.9% yield, investors snapped up $323 million worth – 37% of yesterday’s total sale.
Interpipe, Ukraine’s top producer of steel pipes and railroad wheels, is buying back $75 million worth of its 2024 Eurobonds, the company reported. CEO Fadi Hraibe told investors “Various instruments are also being considered for attracting financing for Capex: issuing Eurobonds, attracting project financing and attracting bank financing.” He later clarified that Interpipe does not have immediate plans to issue a new Eurobond. Located in Dnepropetrovsk, the mines-to-metals company employs about 11,000 workers.
Ukraine’s international reserves are “over $28.5 billion,” the highest level in eight years, Bohdan Danylyshyn, head of the Council of the National Bank of Ukraine, wrote on his Facebook page. This would be $3.2 billion higher than at the start of 2020, or a 13% increase. He wrote that during this year of the Covid shock, Ukraine’s Central Bank spent up a net $1.1 billion to defend the hryvnia.
In a televised briefing, the Economy Minister Petrashko said that Ukraine’s GDP probably shrank in the fourth quarter by 3% yoy. This represents a stabilization from the cataclysmic 11.4% yoy drop in the second quarter. The third quarter drop was 3.5% yoy, says the State Statistics Service. For all of 2020, Petrashko predicts a GDP shrinkage of 4.8%. Looking ahead, he predicts this will be largely cancelled out by 4.6% growth in 2021. He said this is the consensus of five forecasts for 2021 – from the IMF predicting 3.4% growth to the EBRD predicting 5.6%.
Bucking the Covid recession, the number of IT companies and IT workers in Lviv increased by 7% in 2020, compared to the previous year, according IT Research 5.0, a study conducted by Fama research agency for Lviv’s IT Cluster. There are now 492 IT companies in Lviv, employing 26,500 people. The average monthly salary of an IT specialist in Lviv is $2,080, about four times Ukraine’s average salary for all sectors. During last spring’s lockdown, all IT companies surveyed switched to remote work — 22% partially and 78% fully.