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717 Goverment finance

Ukraine places 1bn Eurobonds under yearly rate of 1.471%

The rate, on the US government guarantees, has become the lowest rate in the history of Ukraine in placements

The minister of finance of Ukraine announced that government placed USD 1bn Eurobonds at a rate of 1,471% per annum, or 30 basic points (bp) above the US Treasury bond curve. The bonds mature in 5 years. It proves that the Ukrainian government conducts its policies correctly in collaboration with the president, the official believes. To note, there have been no defaults on bonds issued on such guarantees, even though they were provided to countries like Jordan and Tunisia that had been below an investment grade.

It was the third placement of the US-guaranteed bonds, with the first placement of five-year USD 1bn in 2014 (at a rate of 1.844%, or 28 bp spread to US bonds) and in 2015 (at 1.847%, or 32 bp spread). The organisers of the placement were Citi, JP Morgan and Morgan Stanley.

The money proceeds are expected to be channeled to cover the budget deficit and strengthen foreign reserves. At this, the EU planned EUR 600mln of macro support for Ukraine in 2016 budget, and the sum is pending upon implementation of reforms in the energy sector.

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