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Ukravtodor, in its debut placement on the Eurobond market, placed $700 million of 7-year bonds at 6.25%, well below the initial return target of 6.625%

, Interfax-Ukraine reported yesterday. Earlier this year, the Cabinet of Ministers approved sovereign bond guarantees up to $740 million for the state highway agency. The organizers of the issue — J.P. Morgan, Dragon Capital, and Ukreximbank – started calling investors on Tuesday.

Raiffeisen Bank Aval changed its name yesterday to Raiffeisen Bank,

 the largely Austrian-owned bank said yesterday. “The name of the bank should be simpler, like everything for our clients,” said Board Chairman Oleksandr Pysaruk. In connection with the renaming, the bank said there is no need to contact branches, reissue cards or reissue documents. Founded in 1992, the bank is primarily owned by Vienna’s Raiffeisen Bank International with 68.27% of shares, and the EBRD, with 30%. Ukraine’s largest foreign-owned bank, Raiffeisen has $4.4 billion in assets, 393 branches, 1,800 ATMs,

Privatization receipts will increase fourfold this, reaching $450 million,

said Kyrylo Tymoshenko, the Deputy Chief of Presidential staff, predicted yesterday at a government forum “Ukraine 30. Economy Without Oligarchs.” Starting prices for three big government corporation sales are: United Mining and Chemical Company, the titanium producer: $138 million; Kyiv’s Bolshevik plant: $50 million; and Kyiv’s President Hotel: $12 million.

Since last fall, the sale of distilleries has netted the government $55 million.

The Property Fund aims to sell 900 state properties this year, most of them are considered ‘small’ or under $10 million in value. To generate more grass roots support, the Rada is considering a bill to channel 10% of proceeds of auctions to local communities, said Dmitry Sennychenko, Director of the Property Fund.

President Zelenskiy said that two large state companies – power producer Centrenergo and chemicals producer Odesa Port Plant – will be auctioned online auction in the coming months

. “Centrenergo is completely ready,” he told reporters, speaking of a company that has 23 power plants across the country. Centrenergo has an installed capacity of 7,690 MW – equivalent to half the capacity of all renewable power producers in Ukraine.

 Returning to the rhetoric of two years ago,

 Zelenskiy said: “My will is that the state should get rid of everything as much as possible. I agree with the position of the Europeans and the United States that the state is not the coolest manager.” Next in line, he said, are two Kyiv hotels – the Presidential and the Ukraine. He said: “Now I really want the President Hotel to be privatized.”

In a second step, the nation’s 11 busiest stations are being prepared for long-term lease under concession contracts with strategic investors

. Already six foreign and domestic investors have shown interest in the concessions, scheduled to start in 2023. “What do we see at the exit?” asked Yuryk. “Citizens and guests of our country, arriving at the station, can eat in famous brands of food courts, drink fragrant drinks in cafes, buy souvenirs, visit branded stores of large chains and manufacturers, use the services of banks, please loved ones with fresh flowers from stores, and have fun in the areas for

Facing stagflation – stagnant growth and 9.5% inflation – analysts are split on whether Ukraine’s central bank will raise its prime rate tomorrow, or keep it at 7.5%

, a Reuters poll indicates. The government had forecast a 4% growth spurt in 2021, but the economy shrank 2% in the first quarter. Seven out of 15 analysts polled by Reuters think high inflation will prompt the National Bank of Ukraine to raise the rate to 8% or 8.5%.

Ukrainians received about $400 million in profit from bitcoin investments, ranking 10th highest in the world,

according to the Digital Transformation Ministry, citing a study by Chainanalysis. The top three were: US – $4.1 billion; China – $1.1 billion; and Japan – $900 million. Six months ago, the Rada approved on first reading a bill, ‘On Virtual Assets,’ which would provide legislative regulation of a market for crypto-assets. Oleksandr Bornyakov, deputy minister of Digital Transformation, said: “Citizens and crypto companies will be able to officially work and receive income from operations with new assets. The incomes

Ukravtodor, the state highway agency, plans to issue its first dollar Eurobonds under a sovereign guarantee

, reports Interfax-Ukraine.  Local and international banks including JP Morgan, Dragon Capital and Ukreximbank are arranging the placement. Calls to investors start today for the bonds, which have tenure of 6.25 years. Last month, the Cabinet of Ministers approved state guarantees for Ukravtodor to issue UAH 10 billion in bonds, the equivalent of $370 million.

Kinstellar is acquiring DLA Piper’s Ukraine practice

. With 60 lawyers, including 10 partners, Kinstellar is now among the largest law firms in Ukraine. Kinstellar reports: “The merger strengthens our key practice areas, including corporate/M&A, banking & finance, employment & benefits, litigation and real estate, and expands our coverage with new practice areas, including tax and intellectual property.” The new management committee is comprised of: Daniel Bilak, Senior Counsel, and Co-Managing Partners Margarita Karpenko, formerly managing partner of DLA Piper Ukraine, and Olena Kuchynska, managing partner of Kinstellar’s pre-merger Kyiv office.

The successful online auction of Lviv Correctional Colony № 48 is to be the first privatization of 35 shuttered prisons put up for sale in a program started this year.

 Two prison sales – one in Odesa and one in Irpin, a northern suburb of Kyiv – failed due to a lack of bidders. Justice Minister Denys Mayluska hopes the Lviv sale will generate investor interest. A separate piece of the Lviv prison colony was sold last week for $1.1 million – almost nine times the starting price. Under the program, 30% of sales proceeds go to the state budget and 70% toward rebuilding existing prisons.

Ukreximbank, the nation’s third largest bank, is putting up for electronic auction 16 real estate properties put up for collateral a decade ago

, before the financial crisis of 2014-2016. At the June 29 auction on SETAM trading system, properties for sale range from a building facing Kyiv’s historic Sofiyiska Square to a one-room apartment in Uzhgorod. Of the 16, six are in Kyiv, including three “architectural monuments,” says Yevhenia Bozhko, managing partner of the National Electronic Stock Exchange.

Ukrzaliznytsia is selling two bears to a Dutch zoo as part of a program started last month to sell ‘non-core’ assets.

 The bears were housed at the Zaporizhia Children’s Railway. They are being transferred to the Ouwehands zoo in Rhenen, Utrecht. The zoo recently reopened its renovated ‘Bear Forest’. “I knew for sure that in the process of selling non-core assets there would be…but I definitely did not expect bears,” Ivan Yuryk, Acting CEO of the state railroad, writes on Facebook. Beyond bears, UZ has identified 182 non-core assets for sale through ProZorro.Sale.

The Deposit Guarantee Fund has completely liquidated 51 of the 97 banks declared insolvent during the 2014-2016 banking crisis,

Svitlana Rekrut, Managing Director of the Fund, tells the Kyiv Post. However, assets frozen for a decade have depreciated sharply, presenting obstacles for the Fund to repay its $4.3 billion debt to the state. The Fund’s goal is to triple by 2023 the size of insured deposits, to $21,800. The EU standard is $122,000.

With the hryvnia flirting with strengthening above 27 to the dollar, the central bank intervened last week, buying $375 million in foreign exchange.

This was almost 10 times the amount bought by the National Bank of Ukraine in the first week of June. On the supply side, high commodity prices – notably iron and grain – are flooding Ukraine with dollars. On the demand side, Covid controls are preventing many Ukrainians from expensive EU vacations this summer, forcing travelers to settle for cheaper package tours to Egypt and Turkey.

China-Ukraine trade during the first quarter grew by one third yoy, to $4.2 billion

, the Economy Ministry press office reported after Ministry officials met Thursday with China’s ambassador to Ukraine, Fan Xianrong. Trade Representative Taras Kachka said: “The Chinese side is interested in increasing supplies of Ukrainian soybeans, peas, barley, wheat, poultry and other products.” Ukraine’s State Consumer Service has said it is working to increase the export to China of Ukrainian chicken, flour, fish, eggs, apples, blueberries, and cherries.

The government is working on a green bond to help repay the nearly $1 billion in Ukrenergo’s overdue debt to solar and wind producers,

 said Ukraine’s Energy Minister Herman Halushchenko. But Baher El-Hifnawi of the World Bank and Mark Magaletsky of the EBRD cautioned that their institutions would only contribute to a bailout package if it were part of a comprehensive package of changes to prevent a recurrence.

The Finance Ministry’s weekly auction raised $700 million in hryvnia and equivalent, 20% more than last week’s auction

. Hryvnia rates were virtually unchanged Tuesday: 6 months – 9%; 14 months – 11.2%; 18 months – 11.3%; 2-year – 12.05%; and 3-year – 12.3% per annum. The novelty was a 5-year bond, which settled at 12.59%. One-year dollar denominated bonds sold for 3.7%, garnering $182 million, the Ministry reports on Facebook.

International buyers are back in the market,

ICU has reported. “Last week foreign investors purchased UAH 2bn [$74 million] of new bills in addition to reinvesting funds they received from redemptions,” the investment group wrote of last week’s auction. Taras Kotovych, Senior Financial Analyst for ICU has calculated that international investors recently bought UAH 3-4 billion, an inflow that strengthened the exchange rate. Yesterday, one dollar was fetching UAH 27.08.

Two years after Ukraine started to cooperate with Clearstream, external investment in government bonds has doubled,

the share of public debt in national currency has increased to 39%, and 5-year bonds have won acceptance, the Finance Ministry reports. In a press conference last week with representatives of the Luxembourg-based international depository, Ministry officials said external investors now hold UAH 98.3 billion, or $3.6 billion, in Ukraine government bonds.

Defending the measure,

Serhiy Bykov writes on Facebook: “Current procurement rules close the opportunities for international players to enter the market, which can immediately bring money.” The new, streamlined approach, he said is “the international format of EPC + F contracts” or engineering, procurement, construction + financing. So far, non-binding memorandums have been signed with two foreign construction giants with access to international financing – Bechtel of the US and Poly Changda Engineering Co. of China.

A international standard stock market and commodity exchange – NEXT-UA — is the goal

of a Memorandum of Understanding signed Monday by the Cabinet of Ministers with EBRD, USAID, and AmCham Ukraine. “NEXT-UA will facilitate the integration of Ukraine’s markets into the international ecosystem, improve price discovery for commodities and provide hedging mechanisms for businesses in the form of transparent markets for capital, energy, agriculture and other sectors,” reads a release by the American Chamber.

Tech giants such as Apple, Google, Microsoft, Netflix, Bloomberg, Alibaba, and Booking.com would have to pay Ukraine’s 20% VAT tax

 when providing sales to customers in Ukraine, under a bill approved yesterday by the Rada at second reading. An explanatory note accompanying the bill says the current tax-free regime discriminates against resident companies that have to pay VAT. The note says: “Establishing special rules for VAT taxation of electronic services is becoming a common practice in other countries, for example, in countries of the European Union, as well as in Australia, Belarus, Kazakhstan, Russia.”

ATB, the supermarket chain, generated the most revenue of all companies in Ukraine last year,

according to State Tax Service figures analyzed by Liga.net. About $4.5 billion flowed through the cash registers of the 1,200 stores of the national chain last year. Despite the recession, ATB’s net income was up 18% yoy. By comparison, Silpo ranked seventh in revenues, up 3% to about $2.3 billion. The Tax Service now posts revenue, profit and loss data for 18,600 Ukrainian companies and 386,500 small and micro businesses.

Faced with big bond redemptions this week, the Finance Ministry on Tuesday made the biggest bond sales of the year

— $358.6 million and 15.9 million hryvnia, or $580 million. Interest rates were virtually unchanged on the hryvnia bonds, ranging from 8.42% for 3-month bonds and 12.3% on 3-year bonds. For dollar bonds, rates did not change: 3.7% for 1-year bonds, and 3.9% for 2-year bonds. The Ministry posted results of the auctions on its website and on its Facebook page.

Metinvest, Ukraine’s largest private company saw its EBITDA increase almost four times in the first quarter yoy, to nearly $1.5 billion

. Rising high iron and steel prices, saw revenues in the vertically integrated steel company increase by 43% yoy, to $3.6 billion. In a sign that the world recovery is spreading beyond China, sales to Europe increased by 10% yoy to 1.48 million tons. Prices continued to rise in March, compared to February: +11% for pig iron; +9% for slabs and flat products; +1% for billets.

The average nominal salary in April 2021 was up almost 30% yoy,

 reaching the hryvnia equivalent of $493, reports that State Statistics Service. This is 2.3 times the minimum monthly wage of $218, a level largely used to set pensions. With Ukraine’s average salary expected to cross $500 in May, Russia’s average salary is stalled at $713. In Ukraine, the fastest growing sectors were IT and science, where salaries were up 48% yoy in April.

Austrian banker Gerhard Bösch has been appointed chairman of the management board of PrivatBank, Ukraine’s largest and most profitable bank

, the bank reports. For the last 15 years, Bösch has worked in high positions for Raiffeisen Bank Aval, the Ukrainian unit of the Austrian bank. As head of PrivatBank, Bösch is expected to prepare the bank for privatization and to fend off lawsuits by the former owners, Ihor Kolomoisky and Gennadiy Bogolyubov. The pair were believed to be behind a lawsuit that held up Bösch’s appointment for four months. Petr Krumphanzl, a Czech banker, stepped down as PrivatBank’s CEO on

US State Department is asking Congress for $255 million in aid to Ukraine for the fiscal year that starts Oct. 1.

“U.S. assistance will strengthen Ukraine’s ability to counter Russian aggression, reads the Ukraine section in the 168-page Congressional Budget Justification. “Funding will accelerate reforms to address corruption, enhance transparency and accountability, including by expanding e-government initiatives, advance institutional reforms and training necessary for European integration.” US taxpayer money will also focus on reforming Naftogaz, supporting the OSCE mission in Ukraine, and Covid-19 ‘vaccine hesitancy.’

Seeking to get Ukraine’s weapons sales to Pakistan back on track,

 Ukroboronprom demonstrated the newest Oplot tank and the Skif anti-tank system last week in Kharkiv to Pakistani General Qamar Javed Bajwa. The de facto ‘CEO of Pakistan’, Gen. Bajwa is army chief of staff and the highest ranking Pakistani official to visit Ukraine. Ukraine’s 20-year arms supply relationship with Pakistan foundered in 2014-2015, when Ukraine was unable to supply tank engines in due to its own defense needs. At the end of Gen. Bajwa’s visit, “Both sides agreed to further

Responding to the world surge in iron and steel prices, Ukraine’s pig iron production rose 9% to 7.1 million tons

during the first four months of this year, compared to January-April 2020. Ukraine slightly outpace world growth of 8.6% and put Ukraine in 10th place worldwide for iron production, according to the World Steel Association. By contrast, Ukraine’s iron production growth in 2020 was only 1.8% yoy.

The government hopes to increase foreign investment from $420 million last year, to $3 billion this year, to $15 billion by 2025,

according to the National Economic Strategy 2030 posted last week on the government’s website. Other goals for 2030 are: double the economy; triple exports to $150 billion; nearly triple labor productivity; cut in half the state share in the banking system; cut the debt-to-GDP ratio to 30-40%; and increase the share of small and medium-sized businesses of exports to 40%.

The Economy Ministry has downgraded its 2021 GDP growth forecast, to 4.1%, from 4.6%,

Ihor Petrashko told Interfax-Ukraine after stepping down as Economy Minister on Thursday. Similarly, the new 2022 growth forecast is 3.8%, down from 4.3%. Although the economy shrank by 2% in the first quarter of this year, he said: “Since April, we have seen positive trends, in particular in terms of industrial production and GDP growth.”

The closing of 2/3 of Ukraine’s banks since 2014 affected 7.7 million Ukrainians – about one third of the adult population,

Eduard Bagirov, chairman of International League for the Protection of Citizens’ Rights, said Friday at a press conference at Ukrinform. The banking crisis engendered a distrust of banks, which can be seen in Kyiv’s skyline today. Rather than putting money in bank accounts, Ukrainians prefer to put their money in bricks and mortar – new apartments.

Ukrzaliznytsia has identified 182 non-core assets to sell as the state railroad looks for ways to turn last year’s loss into a profit this year of around $130 million

. To test waters on market interest and pricing, 11 properties will be sold through Prozorro.Sales: six stores, four ‘non-residential’ buildings, and one sports club, UZ’s press office said Friday. “Historically, Ukrzaliznytsia has a lot of premises and buildings that are no longer used by the company,” said Ivan Yuryk, chairman of company that employs 250,000 Ukrainians. “Instead, we are forced to spend money on their maintenance. Thus, instead of profits, they generate extra costs.”

Lyubchenko said he wants banks to move from buying government debt to lending to manufacturers.

 He said he favors an innovation economy and stress on producing at home rather than importing. “The law enforcement function should leave the economy,” said Lyubchenko, who served for the last year as head of the State Tax Service. “The law enforcement function should be focused on the use of budget funds, not on the sphere of production.”

The Rada approved yesterday a banking reform bill seen as a key step to restarting Ukraine’s stalled $5 billion IMF program

, Reuters reports. Passed on first reading, the bill strengthens the independence of the central bank and expands its regulatory powers to push out corrupt or incompetent managers or board members of private and state banks. In 2015-2017, the central bank closed two thirds of Ukraine’s privately owned banks and nationalized the largest one, PrivatBank.

Fighting for the business of Ukraine’s 12 million pensioners

, Igor Smelyansky, CEO of Ukrposhta, disconnected last night all third party ATM machines in Ukraine’s 11,000 post offices. He wrote on Facebook that he is protesting a decision by the Pension Fund to force pensioners to open bank accounts. Smelyansky said this will cause needless hardships “especially in 96% of settlements in Ukraine where there are no banks.” Banks in Ukraine are closing branches because digital banking has a lower overhead and is more profitable.

Interpipe, the steel pipe and Wheel Company, successfully returned to international capital markets last week,

completing the placement of $300 million worth of Eurobonds, maturing in 2026. The coupon rate is 8.375% per annum. Fadi Hraibi, director general of the company, said that the bonds, now listed on the Luxembourg Stock Exchange: “Over the past years, we have undergone an impressive business transformation and achieved financial stability.” The breakdown of the investor base is: US – 43%; UK – 26%; and EU – 26%. Fitch gives the bonds a ‘B’ rating.

The privatization drive is “irreversible,

” Kyrylo Tymoshenko, Deputy Presidential Chief of Staff, wrote on Facebook after President Zelenskiy chaired an inter-agency Zoom call Monday on the campaign. Over the next six weeks, there are to be 100 auctions of large-scale and small-scale state properties. He said: “It will, firstly, give new life to unprofitable property and, secondly, attract billions of investments.” Arguing that investors are taking notice, he said the average number of auction bidders has risen, from 3.67 in April 2020, to 4.57

Auctions of state or communal farm land will now take place openly through electronic auctions conducted on the Internet,

under a bill adopted yesterday by the Rada. “Anyone with a computer and Internet access will be able to take part in the auction,” (Interfax-Ukraine). “According to the ministry, the winners of the bidding will be those who offer the highest price per lot.” Plot sizes are limited to 20 hectares and buyers are limited to Ukrainians.

The Finance Ministry raised $513 million – in dollars, euros and hryvnia – in its weekly government bond auction yesterday.

The Ministry reported on Facebook that hryvnia bonds, annual yields were virtually unchanged: 3-month at 8.5%; 1-year at 11.2%; 18-month at 11.3%; and 2-year at 12.05%. Investors bought $63 million worth of 2-year dollar bonds at 3.9%. The majority of sales were 1-year euro bonds. Investors bought €238 million – two times more than in the total sold in the two previous euro auctions this year.

On May 31, Ukraine will make its first payment on GDP warrants issued under the 2015 public debt restructuring.

The payment will be $40.1 million, according to the Irish Stock Exchange. With a total face value of $3.2 billion, the bonds are to be repaid through 2040, depending on GDP growth. Analysts warn that, if Ukraine’s economy grows steadily, the warrants could become a time bomb for the nation’s finances. Yesterday morning the warrants were trading at 108.5% of face value. The first payment will be $1.26 of their notional amount.

DTEK Energy yesterday completed a 14-month restructuring of its loan portfolio, converting current Eurobonds and major bank debt, totaling more than $2 billion, into new Eurobonds;

the company said last night after London markets closed. In an announcement posted on the London Stock Exchange, DTEK said parts of the current debt on DTEK Energy Eurobonds were converted into $425 million worth of DTEK Oil and Gas Eurobonds, at a rate of 6.75% per annum and maturity until Dec. 31, 2026. Other debt was converted into new DTEK Energo Eurobonds at a rate of 7%, maturing Dec. 31, 2027.

“Thus, DTEK Energy’s loans have been transferred to a public financial instrument,”

the press release reads. DTEK CEO Maksym Timchenko said: “Despite the loss of assets in Donbas, the systemic crisis in the Ukrainian electricity market and the economic downturn caused by the COVID-19 pandemic, DTEK Energy has successfully completed the process of restructuring its Eurobonds and its main bank debt in the amount of more than US$2 billion.”

The National Bank of Ukraine opposes the transformation of Ukrposhta into a postal bank

, arguing that Ukraine’s four large state-owned banks already dominate banking in the country. Smelyanskiy counters that he will focus on Ukraine’s ‘under-banked 20%’ – the thousands of villages that have no bank branches. He has said that by reaching Ukraine’s rural 6 million, Ukrposhta would soon be second only to PrivatBank in the number of payment cards.

Ukraine and IMF may reach a staff level agreement in the next few weeks,

close to the one year anniversary of the $5 billion Stand-By Agreement, Yuriy Geletiy, Deputy Governor of the National Bank of Ukraine, announced in an interview with FinClub. Referring to reforms that must pass the Rada, he said: “Work with our Banking Committee is quite constructive. I hope it will be the same with other committees, which will consider the legislative changes needed to continue cooperation with the IMF.” After the IMF approved an 18-month stand-by program last June 9,

Further IMF aid should be strictly tied to concrete progress by Ukraine in adopting EU-standard changes,

Henrik Larsen, who served as an EU political adviser in Ukraine from 2014 to 2019, wrote in an Atlantic Council blog. Headlined ‘US Support for Ukraine Should be Ties to Reform Progress,’ the article notes that the IMF ‘pause’ holds up $2.9 billion from the IMF and €600 million in EU aid. “The IMF should publicly state its unwillingness to disburse this money unless Ukraine demonstrates a convincing track record of convictions in high-level corruption cases,” wrote Larsen, now a

Kyiv’s Sikorsky airport is embarking on a 3-year, $100 million investment program to allow long haul jets to land by the end of 2023.

 The asphalt concrete runway is to be rebuilt with concrete and extended by 20%, to 2,770 meters. Often restricted by fog, the airport will receive a Category II ILS instrumental landing system. This will cut in half – to 350 meters – the visibility needed for pilots to land. With only one landing strip, Kyiv’s right bank airport will be closed for eight months in 2023 for runway reconstruction, Denis Kostrzhevsky, head of Master-Avia, the airport management company, told reporters

Ukraine’s central bank welcomed a decision by the Bank of England on Friday

that it approved the “bail-in” of $595 million of loans that a British-based financial company made to PrivatBank before it was nationalized in 2016, Reuters reports. In a statement, the National Bank of Ukraine said the decision by Britain’s central bank bolstered Kyiv’s argument the nationalization had been carried out within the framework of a reliable legal procedure and complied with international standards.

The IMF’s decision to distribute $650 billion in Special Drawing Rights this summer is undermining arguments for free market changes in countries like Ukraine,

Timothy Ash argues in an essay. He writes from London: “The hope was the looming debt service hump for Ukraine in Q3, when $3bn in external debt falls due, would concentrate minds in the Zelenskiy administration. But likely with $2.8bn in SDR allocations due in September now, I think there will be zero incentive on the part of the administration to do anything to meet the conditionality in the SBA [Stand-by Arrangement]. This SBA is dead now in my mind,

Bitcoin mining consumes as much electricity as Ukraine.

Bitcoin consumes almost 150 TeraWatt hours, according to the Bitcoin Electricity Consumption Index run Cambridge University’s Centre for Alternative Finance. By contrast, Ukraine generated 150 TeraWatt hours last year. Bitcoin dropped in value by 10% last week, after Tesla CEO Elon Musk announced that his car manufacturer will stop vehicle purchases using Bitcoin because of environmental concerns.