Ukraine to Repay Debts, May Delay Eurobond, Pakhatyuk Says
Ukraine pledged to fulfill its debt
obligations and said it will only go ahead with a Eurobond sale
next month if market conditions are “favorable.”
The former Soviet state will service and repay all of its
debt, Halyna Pakhachuk, head of the Finance Ministry’s financial
policy and government-debt management department, told reporters
today in the capital, Kyiv.
“The Finance Ministry will borrow abroad only if the
situation is favorable,” she said. “I consider the situation
unfavorable should interest rates exceed 9 percent.”
Ukraine wants to raise 13.67 billion hryvnia ($1.7 billion)
abroad this quarter, 12.15 billion of which would come in March,
the ministry said Feb. 9. It picked JP Morgan Chase Co.,
Morgan Stanley (MS) and Russian investment banks VTB Capital and
Troika Dialog, which is controlled by OAO Sberbank, to lead
manage a potential Eurobond sale, according to a Feb. 3
statement, without providing further details.
Ukraine’s government bonds due to 2016 fell, pushing yields
up to 9.879 percent as of 4:27 p.m. in Kyiv compared with 9.867
yesterday, data compiled by Bloomberg show. Similar-duration
Russian debt yields 7.39 percent.
“We want to increase domestic borrowing,” Pakhachuk said,
adding that the ministry will introduce weekly dollar-
denominated, domestic-bond auctions for individuals from the
second quarter. “It’s better to pay a 9 percent interest rate
to our citizens than to transfer abroad.”
All banks should be able to offer dollar-denominated
government bonds to individuals, Pakhachuk said. The ministry
and the central bank are working on simplifying the purchase
process, she said.
Ukraine is seeking to raise 17.2 billion hryvnia
domestically by the end of March, according to the ministry’s
plan.
To contact the reporter on this story:
Daryna Krasnolutska in Kyiv at
dkrasnolutsk@bloomberg.net;
To contact the editor responsible for this story:
Balazs Penz at
bpenz@bloomberg.net