Ukraine placed EUR 1.0bn of 7-year bonds at a 6.75% yield. The issue will mature on Jun. 13, 2026, paying an annual coupon. The book size exceeded EUR 5.5bn. The placement will be settled on Jun. 20.

An IMF mission visited Ukraine on May 21-30, making a constructive post-visit statement but delaying talks until after a new government is formed, as President Zelensky called early Rada elections for Jul. 21. The timing became unclear after the snap ballot was challenged at the Constitutional Court. Given the uncertainty, we compiled two lists of key events to watch in relation to domestic politics and the IMF (p. 2). In a snap-election scenario, we expect Ukraine to sign a new EFF program in 4Q19 and secure a tranche in late 2019-early 2020. If elections are pushed to Oct. 27, the formation of a new Cabinet and IMF talks will likely be delayed to 2020, making it more challenging for the government to raise sufficient budget financing, but still manageable given government’s solid liquidity buffers.

President Volodymyr Zelensky signed a decree appointing Aivaras Abromavicius, economy minister in 2014-2016, as a member of the Supervisory Board of Ukroboronprom, the state concern managing over 100 defense sector companies. Separately, Zelensky will reportedly travel to France and Germany next Monday and Tuesday, his second EU trip in as many weeks, to meet with President Emmanuel Macron and Chancellor Angela Merkel.

The Cabinet of Ministers yesterday approved the 2019-2023 strategy for Ukrainian Railway (RAILUA), the state rail monopoly.

LSE-listed MHP, Ukraine’s largest poultry producer, held a conference call to discuss its 1Q19 financial results and outlook.

Customer deposits at Ukrainian banks inched lower in May, with hryvnia leftovers -0.6% m-o-m (yet +7.0% y-o-y) and F/X deposits -0.6% m-o-m (-0.5% y-o-y). Outstanding loans in UAH dropped by 2.5% m-o-m (+0.7% y-o-y), with F/X loans -1.7% m-o-m (-5.7% y-o-y).

The Finance Ministry sold UAH 6.5bn of UAH-denominated bonds at an auction yesterday, up from UAH 2.0bn last week and above the YTD weekly average of UAH 5.4bn, including UAH 3.3bn of debut long 5-year bonds at 15.84% p.a. The Ministry also sold UAH 1.4bn of 2-year bonds at 17.95% p.a. and UAH 0.9bn of 1-year bonds at 18.45% p.a. keeping yields virtually unchanged w-o-w. The Ministry once again capped placements of 3-month and 6-month bonds at UAH 0.5bn each, marginally cutting placement yields by 5bp and 9bp w-o-w, respectively.

LSE-listed MHP reported 1Q19 sales of $436m (+43% y-o-y), EBITDA of $83m (-7%) and net profit of $33m (-63%), booking EBITDA and net margins of 19.0% and 7.6% (-10.2pp and -21.7pp y-o-y). Quarterly export revenues stood at $268m or 65% of total sales (vs. $162m or 53% of sales in 1Q18). The results incorporated MHP’s latest acquisition, Slovenian-based poultry producer Perutnina Ptuj, starting from Feb. 21, 2019, when the purchase was completed.

According to a May 26-June 7 poll by Kyiv International Institute of Sociology, President Volodymyr Zelensky’s Servant of the People party remains supported by almost 50% of decided voters. Four other parties polling above or near the 5% electoral threshold continue to lag far behind, with pro-Russian Opposition Platform on 12%, ex-President Petro Poroshenko’s European Solidarity and opposition leader Yulia Tymoshenko’s Fatherland both on 8%, and musician Svyatoslav Vakarchuk’s Voice on 6%.

The Finance Ministry announced yesterday a roadshow to market a new 7-year euro-denominated Eurobond. Investor meetings will be organized in London, Frankfurt, Munich and Milan. In related news, FinMin will offer a debut issue of long 5-year UAH-denominated domestic bonds maturing in February 2025 at today’s primary auction.

Consumer prices rose by 0.7% m-o-m in May, slowing from 1.0% growth in April but pushing y-o-y inflation up to 9.6% from 8.8% in April. Core inflation, an indicator adjusted for regulated utility tariffs and prices of raw foods and energy, inched up by 0.2% m-o-m (vs. +0.4% in April), remained stable y-o-y at 7.4%, in line with the April reading.

With a global bounce in stocks last week, Ukrainian stocks, as measured by the KP-Dragon index (foreign-listed having a combined weighting of c. 80%), rose by 2.9% w-o-w, while the local UX index lost 1.4% in UAH and 1.1% in USD terms. Foreign-listed equities were divergent, with -11% in JKX, +6.3% in Regal Petroleum, -2.9% in MHP, +1.3% in Astarta, +2.1% in Ovostar, +4.2% in IMC, +8.4% in Kernel and +8.8% in Ferrexpo, with the latter generating almost 90% of total turnover in Ukrainian stocks or $33m last week.

Despite a flurry of pre-election activity, all eyes are on a forthcoming Constitutional Court ruling on an appeal asking to invalidate Zelensky’s early election decree. The Court is scheduled to hold a first public hearing tomorrow and announce its decision by the end of the month (though media reports have suggested a shorter time frame). According to the latest media speculation, despite the election campaign getting into full swing, with all major parties announcing their election lists, the risk that the Court will terminate the process by its ruling is still tangible.

Major political parties formally entered the parliamentary election campaign at the weekend, unveiling their candidates.

Ferrexpo held an AGM on Friday, approving a final 2018 dividend of 6.6 US cents per share, electing Lucio Genovese to the Board and re-electing Vitalii Lisovenko, Stephen Lucas, Christopher Mawe and Kostyantyn Zhevago as directors. The company announced that Graeme Dacomb will be appointed to the Board as an independent non-executive director chairing the Audit Committee and will be a member of an independent review committee investigating Blooming Land.

NBU gross foreign reserves dropped by 5.5% m-o-m (-$1.1bn) to $19.4bn in May, bringing their YTD decline to -6.8% or $1.4bn and the latest reading being equivalent to 3.2 months of 12-month trailing goods and services imports.