State rail monopoly Ukrainian Railways (RAILUA) released a cleansing statement, noting it held restricted discussions with an ad hoc group (AHG) of bondholders on Apr. 1-8 about restructuring its $703m notes due July 2026 and $352m notes due July 2028. The company proposed converting the two issues into a single Eurobond amortizing over 2030-2033, with a 20% nominal haircut (subject to variation via a “principal adjustment mechanism”) and a reduced coupon rate. The statement said the AHG was “supportive of a consensual reprofiling” but rejected the proposal without making a counterproposal. The company intends to continue engagement with the AHG to reach agreement on restructuring terms. In supplementary disclosure, RAILUA reported its 2025 revenue declined by 16% y-o-y to $2.2bn, on an 8% drop in cargo shipments to 161 Mt, while EBITDA fell 30% y-o-y to $293m, also reflecting substantial cost inflation. As a result, Net Debt/EBITDA rose to 5.2x at end-2025, up from 2.9x at end-2024.

Ukraine’s headline CPI rose by 1.7% m-o-m in March, accelerating from 1.0% in February and bringing the y-o-y rate to 7.9%, up from 7.6% in February. Core inflation, which excludes administratively regulated tariffs and prices of raw foods and energy, rose by 1.5% m-o-m, up from 0.7% in February, and inched up on a y-o-y basis, to 7.1% from 7.0% in February.

A group of Naftogaz bondholders, representing more than 25% of the company’s 2026 and 2028 Eurobonds, has hired Cleary Gottlieb Steen & Hamilton as advisors.

Naftogaz held a conference call, providing a condensed update on its operating and financial performance and urging Eurobond holders to form an ad-hoc committee to facilitate a debt management exercise. The company did not indicate its preferred restructuring terms but stated it faces $2.8bn in debt service this year and intends to extend the maturities of debt owed to IFIs and Ukrainian state-owned banks (SOBs). Management said gas production declined by 11% in 2025 to 12.4 bcm due to Russian attacks on its assets. The company supplied 16.4 bcm under Public Service Obligations (PSO), while another 0.6 bcm was sold to industrial consumers. To cover the production shortfall and replenish underground storage, Naftogaz imported 5.7 bcm of gas at an average price of UAH 21,400/tcm ($513/tcm). The company estimates it will need to import an additional 1.5 bcm during the next heating season, on top of 1.9 bcm already imported in 1Q26, with any further production losses also to be covered by imports. Naftogaz also reported 2025 revenue of $6.5bn (-13% y-o-y) and EBITDA of $1.6bn (-36% y-o-y). Total debt increased by 63% to $4.2bn, with SOBs, IFIs, and Eurobonds accounting for 36%, 34%, and 30%, respectively. Cash declined to $0.6bn at end-2025 from $2.1bn at end-2024. Management expects to publish audited financials by end-April.

News: Baseload day-ahead (DAHD) electricity prices in Ukraine averaged UAH 7,075 (EUR 140)/MWh in March, down 27% m-o-m but up 37% y-o-y, bringing the 1Q26 average to UAH 8,234 (EUR 164)/MWh, up 51% y-o-y. Commercial electricity imports decreased by 25% m-o-m but rose 2.5x y-o-y in March to 0.9 TWh (1.3 GW on average), implying import capacity utilization of 62%. Ukraine resumed small-scale electricity exports in March, supplying 31 GWh (41 MW on average), down 61% y-o-y. (OREE, ENTSO-E Transparency Platform, Energy Ministry) Dragon view: Both day-ahead electricity prices and import volumes retreated from February’s all-time highs, reflecting an improved energy sector situation. We estimate power shortages (after imports) averaged around 3% in March, down from 13-15% in February and 18-20% in January. While Russia continued targeting Ukraine’s energy system throughout March, the intensity of attacks declined and damage remained limited, partly due to improved air defense effectiveness. At the same time, warmer and unseasonably sunny weather (average temperature +6.9°C vs. -3.7°C in February) reduced electricity demand while boosting solar generation. This enabled an early end to the heating season and allowed Energoatom to bring a second power unit into scheduled maintenance ahead of time with limited impact on overall supply. Electricity prices have continued to decline in April, averaging UAH 4,290 (EUR 85)/MWh. The main driver was the Easter holiday period in Europe, which pushed prices in neighboring markets into negative territory, incentivizing Ukrainian traders to increase imports and putting downward pressure on domestic prices. There were several instances of sporadic consumption caps in early April, reflecting the expiry of the temporary UAH 15,000/MWh price cap (effective Jan. 18-Mar. 31) and the return to variable caps of UAH 5,600-6,900-15,000/MWh depending on the hour. This constrained profitable electricity imports, particularly in the morning. In addition, the exclusion of gas-fired power plants from the gas PSO regime in mid-March (see our Daily for Mar. 24) reduced access to cheap gas, weighing on output and contributing to minor shortages. The power market performed better than expected in March due to lower attack intensity and sunnier weather, posing downside risk to our baseline assumption of an average 10% shortage in 2026 (after c.4% in 2025). Shortages should remain contained in spring, supported by lower seasonal demand and stronger solar generation, although they will likely remain uneven across regions, with areas targeted by Russian attacks (east, Odesa, Kyiv) facing consumption curbs. Prices should recover from current lows as European markets normalize after the holidays, while additional scheduled nuclear maintenance is likely to tighten supply and provide further price support.

NBU gross international reserves declined by 5.0% ($2.8bn) m-o-m in March to $52.0bn, following a similar drop in February. Reserves remained up 23% y-o-y and covered 5.5 months of prospective goods and services imports. Separately, the hryvnia weakened by 1.3% m-o-m against the US dollar in March to UAH 43.8:USD (official rate, -5.3% y-o-y), on top of a 0.8% decline in February, but has since appreciated by 0.7% thus far in April to UAH 43.5:USD (-2.5% YTD).

Industrial production (IP) in Ukraine fell by 2.6% y-o-y in February after an 8.1% y-o-y drop in January, bringing the 2M26 contraction to -4.6% y-o-y. According to statistical official estimates, seasonally adjusted IP decreased by 0.9% m-o-m in February, following a revised 2.8% m-o-m decline in January.

Ukraine’s parliament approved yesterday four pieces of legislation required under the $8.1bn IMF EFF program and the $50bn EU Ukraine Facility. In particular, lawmakers adopted the IMF-required bill preserving the 5% military levy for three years after the end of martial law, as well as three Ukraine Facility-related bills covering digitalization of enforcement proceedings, integration into the EU energy market, and enhanced distribution of powers between local governments and executive authorities (first reading).

• Russia’s territorial gains fell to a two-year low in March, with front lines remaining largely stable for almost two months now despite a high intensity of Russian infiltrations and assaults. • Russia’s drone attacks on Ukraine set a new wartime record, but Ukraine’s interception rate remained high at around 90%. Russia’s missile attacks halved m-o-m in March on a sharp drop in ballistic launches. • After repeatedly hitting Russia’s two major oil export hubs on the Baltic Sea in late March, Ukrainian drones struck an oil terminal in the Black Sea port of Novorossiysk and two more oil refineries last week. • Russia claimed to have intercepted more Ukrainian drones in March than it launched against Ukraine. • President Zelensky said Ukraine has conveyed an energy ceasefire offer to Russia via the US.

The National Bank’s survey-based business activity index (a PMI-type gauge) rose to 52.7 in March (0-100 scale), up 6.8pt m-o-m.

Ukraine’s headline current account (CA) deficit widened sharply to $4.7bn in February from $0.8bn in January, marking a new record high. At the same time, the financial and capital account (FA) balance improved to a $2.3bn surplus from a marginal $0.1bn deficit in January, bringing the overall balance to -$2.4bn (vs. -$0.9bn in January).

The European Commission proposed disbursing EUR 45bn from the EUR 90bn Ukraine Support Loan (USL) in 2026, including EUR 16.7bn in direct budget support — split evenly between the existing Ukraine Facility and new macro-financial assistance (MFA) — and EUR 28.3bn for procurement of defense products produced in Ukraine, the EU, EEA/EFTA countries, or other eligible jurisdictions subject to specific criteria. The budget support component will be conditional on progress in rule of law, anti-corruption reforms, and economic resilience, with MFA disbursements expected to come first. The proposal requires approval by the European Council, while disbursements will become possible once all USL-related procedures are finalized, including approval of guarantees backed by the EU budget’s “headroom” — the difference between the maximum resources the European Commission can request from member states and its actual annual budget needs. Separately, the European Commission approved Ukraine’s request for derogations from standard procurement rules to enable urgent drone purchases for the ongoing war against Russia. These exemptions essentially allow the use of EU funding to procure products containing components sourced outside the EU, EEA/EFTA, or Ukraine, provided urgency is demonstrated.

Ukraine’s Finance Ministry raised $0.2bn in net proceeds at primary bond auctions in March, down from $0.5bn per month in January and February, bringing YTD net sales to $1.2bn. Last month’s net issuance included UAH 7.0bn ($160m) of UAH-denominated bonds (including a switch auction to exchange UAH8.4bn of bonds maturing in March for a new 2029 issue) and $50m of USD-denominated bonds. The total rollover rate stood at 146% in 1Q26, including 161% for UAH bonds and 80% for FX bonds.

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, announced the acquisition of 190,000ha of farming assets from its founder and Board chairman Andrii Verevskyi for $348m. The first $300m installment will be paid immediately upon settlement, with the remaining balance due by Jun. 30, 2026.

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, announced the acquisition of 190,000ha of farming assets from its founder and Board chairman Andrii Verevskyi for $348m. The first $300m installment will be paid immediately upon settlement, with the remaining balance due by Jun. 30, 2026.

Ukraine’s direct and guaranteed public debt totaled $213bn as of end-February, down 0.8% m-o-m and flat YTD, the Finance Ministry reported.