The work of the IMF is more important for Ukraine than for Eurobonds Fitch

The return of Ukraine to the international bond market improves the situation with the upcoming payments on the national debt. However, official creditors, mainly the international monetary Fund (IMF) – remain the cornerstone of external financing of Ukraine and supports the implementation of reforms. This was reported by the press service of the international rating Agency Fitch Ratings.

“The high demand is evidence of the progress made by the Ukrainian authorities in addressing the economic imbalances and strengthening the macroeconomic policy of the country. The deal reduces the refinancing risk since a portion of the proceeds will be used to repurchase $ 1.6 billion. bonds maturing in 2019 and 2020. And this will further increase reserves, which in August rose to $ 18 billion.”, – noted the Agency.

Fitch believes that sustainable access to the bond market will improve the flexibility of external funding, but while Ukraine will not restore the reputation, international support will remain a key source of balance of payments and budget financing.

“We believe that the IMF program also reinforces the dynamics of reforms that contributed to the return of Ukraine to the bond market and helped to secure support from other creditors from the official sector. Further payments under the program of expanded financing will depend on the efforts of the government,” said Fitch.

The Agency believes that the slowdown in reforms poses risks, however the changes needed to reduce the deficit of the Ukrainian budget. “We believe that the government remains committed to reform. However, the momentum in areas such as privatization and the fight against corruption can be a complex task. … Approach to the elections of 2019 may also affect the dynamics of reforms,” says the Agency.

As previously noted, one of the risks of entry into the international capital market is the possible inhibition of the reform. Previously, the major impetus for their meeting was the priority of getting tranches from the IMF.

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. the main buyers of the new 15-year Eurobonds of Ukraine at $ 3 billion. were investors from the USA (46%) and the UK (36%).

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.