The new Eurobond issue and redemption of short-term bonds will improve the foreign currency liquidity of the government and reduce the size of foreign debt payments in the coming years. This opinion was expressed by the chief economist of Dragon Capital Elena Belan.
“According to our estimates, balances of foreign currency funds in government accounts after the end of the transaction is 2.4 billion (including 1.1 billion of funds confiscated from the supporters of Viktor Yanukovych). This amount will be sufficient to Fund its planned payments on foreign and domestic currency debt at least until February 2018 (or even longer if the dollar bonds will be refinanced). At the same time, foreclosure short Eurobonds will slightly reduce the amount of foreign debt repayment in 2019 and 2020, to 6.3 billion and 5.7 billion dollars respectively,” – said Belan.
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The analyst noted that, nevertheless, payments of external debt in the next two years will remain significant.
“The total amount of payments on external debts of the public sector in 2018 and 2019 will be more than $ 10 billion, including 7.6 billion dollars will be required to pay from the budget. In addition, in the next two years will be repaid to foreign currency government bonds worth 3 billion dollars”, – said Belan.
According to experts, successful placing of Eurobonds the Ministry of Finance was due to the favorable situation on foreign markets and positive expectations of investors regarding the IMF program.
“To cope with growing payments in the pre-election period, the authorities need to remain in the IMF program”, – concluded the Belan.
We will remind, Ukraine released his debut after the restructuring of the 2015 Eurobonds, placing $ 3 billion 15-year securities at a rate of 7,375% per annum, which will be amortized in four equal tranches in 2031-32.
Part of the funds received from the placement will be used for the redemption of the nominal value of Eurobonds 2019 (with a coupon rate of 7.75% per annum) in the amount of $ 1.2 billion (from $ 1.8 billion in circulation) and Eurobond 2020 (also with a rate of 7.75%) of $ 0.4 billion. (of 1.8 billion). The securities will be redeemed at a price of 106% of par (2019) and 106,75% (2020), and the calculations are expected on September 25.
