Ukraine Says It Plans Eurobond Return Once Market Interest Rates Decline

KIEV, Ukraine -- Ukraine said it will re-enter the Eurobond market once borrowing costs ease after the government last month shelved its first planned sale of dollar bonds in three years.

Deputy Prime Minister Serhiy Tigipko

“Our strategy will be to monitor the situation and markets,” Deputy Prime Minister Serhiy Tigipko told reporters in Kiev today. “Once the interest rate declines further, we will have to enter the Eurobond market.”

Ukraine on July 15 abandoned the planned sale of about $2 billion in dollar bonds after investors demanded yields higher than 9 percent, Tigipko said at the time.

The government’s agreement with the International Monetary Fund on a new $15.2 billion facility and a $2 billion loan from Russia’s VTB Bank covered its financing needs, reducing the need for extra funds, the finance ministry said last month.

“There is no rush,” Tigipko said today. The government last week received a first $1.9 billion tranche of its IMF loan, allowing the country’s budget financing to return to “normal,” he said.

The IMF tranche “gives us confidence, and we are not going to enter expensive markets,” Tigipko said.

The yield on Ukraine’s outstanding dollar bonds due November 2016 slipped 11 basis points to 6.437 percent as the note reached its highest since April 2008, according to Bloomberg prices.

Ukraine’s credit rating was raised one level last week by Standard & Poor’s after the IMF approved the new loan. Ukraine has to keep its deficit within 5.5 percent of gross domestic product this year and 3.5 percent in 2011 under the fund’s program.

Tigipko said today Ukraine’s government expects to receive its second IMF tranche in the winter, without elaborating.

Source: Bloomberg