Fixed Income Daily Watch 08.12.10

Alfa-Bank Ukraine
Fixed Income Daily Watch
Wednesday, December 08, 2010

MARKET COMMENT
Market walks with the solid volatility, which became normal for 2010: yesterday, most corporate Ukrainian Eurobonds got lifted close to evening and today they started with sell-off. US treasuries decline significantly since yesterday, which resulted in weak opening of CIS market.
We see the demand for short-term Ukrainian corporate bonds: Azovtl, Eximuk12, Alfaua, Prbank12 and expect to see bottom fishers in longer term Eurobonds.

UKRAINIAN NEWS
MHP will conduct 10% SPO
MHP\'s majority shareholder and CEO Yuriy Kosiuk is selling 10% share in the Company. The SPO will lead to liquidity increase of MHP stock (listed on LSE) due to free-float increase from current 20% to almost 30%. We regard the news as neutral for MHP eurobond.

City of Kiev attracts UAH 0.5 bn loan
City of Kiev attracted UAH 0.5 bn loan from state-owned banks Ukreximbank and Oschadbank at 12.5% rate in order to compensate difference in tariffs to public utilities company Kievenergo. The banks have lent UAH 250 mn each for 1 year. Just after the loan was attracted, city of Kiev has repaid its debt to Kievenergo. Earlier the news appeared that Kiev was going to attract UAH 0.5 bn loan from either Alfa-Bank or Prominvestbank. The case shows that currently city of Kiev has limited opportunities for domestic financing attractions. The major reasons are strained banking system liquidity and quite large portfolio of loans already attracted by the city. In September Kiev attracted UAH 1.5 bn from the named state banks for the same purpose of debt repayment to Kievenergo. The news is neutral for city of Kiev eurobond.

Please find full version of report in the attached file