On the evening of July 23, the Ministry of Finance placed 12-year Eurobonds of Ukraine for a total amount of $ 2 billion at 7.25% per annum. The deal is arranged by Goldman Sachs and J.P. Morgan.
$ 846 million out of the received amount will be used to redeem the bonds of previous issues (with the repayment in 2021-2022).
It is the second attempt by the Ministry of Finance to raise funds in the global debt market. The first attempt took place in early July when the government planned to place Eurobonds for $ 1.75 billion, but abandoned these plans due to the statement of the chairman of the National Bank Yakov Smoliy that he would resign due to "political pressure". Smoliy never ended up explaining what kind of "political pressure" it was. However, the government refused to sell the bonds.
“It is not bad that the Cabinet of Ministers was able to place bonds from the second attempt because it needs to make large payments on the state debt and the budget deficit needs to be constantly repaid. What is worse is that the authorities have not yet been able to form an adequate market for domestic borrowing in foreign currency. In addition, the state and other banks have accumulated a deposit portfolio in dollars and euros in excess of $ 9 billion, and do not issue foreign currency loans in such volumes. With the correct organization of the market, the Ministry of Finance could attract large amounts of currency in Ukraine, and not from abroad. Moreover, it would be much cheaper. Dollar bonds are placed at 3.5% per annum, and Eurobonds at 7.25%. The savings are obvious, but due to poor organization in the country they cannot collect the required volumes, and the placement of government bonds occurs in small amounts," the banker commented on the situation.
Andrey Pshenichnyi for dubinsky.pro