UFS: Special commentary on the additional placement of sovereign Eurobond Ukraine-2017-2
September 20, 2012
Yesterday Ukraine (B2/B/B+) again entered the Eurobond market. Favourable market environment and huge demand for risk assets allowed to attract $600 million. The issue was added to the already circulating Ukraine 17-1 worth $2 billion with the coupon rate of 9.25% and maturity in July 2017.
Due to its high credit risk, Ukraine offered a small premium to the market in order to attract investors. The issue was placed at 107.125% of the nominal, which at the moment of the decision announcement stood about 100 b. p. below the quotes of the circulating issue. This pushed quotes deeply down to the defined benchmark price.
Today Ukraine17-1 is trading almost at the same level as at placement (107.0-107.1) yielding 7.45%, which is 35 b. p. above the Ukrainian yield curve. As a speculative idea we recommend buying these Eurobonds. The price upside is 140-150 b. p. or 108.5% of the nominal. We expect the yield to decline to 7.1-7.15%.
Issue — Ukraine, 9.25% 24jul2017, USD
Country of riskUkraine
Redemption (put/call option)
М/S&P/F— / — / —
Company — Ukraine