A summary of recent Ukrainian government bond auctions and scheduled redemptions.

The IMF cut its 2021 real GDP growth forecast for Ukraine by 0.5pp to 3.5% y-o-y and raised the 2022 projection by 0.2pp to 3.6%. The Fund also substantially downgraded its inflation outlook for this year, forecasting end-2021 CPI at 10.2% y-o-y, up 3.0pp from its previous estimate, while leaving the end-2022 forecast unchanged at 6.0% y-o-y. The IMF also improved its C/A forecast, projecting a small deficit of 0.7% of GDP this year (vs. 2.5% gap estimated before) and expecting it to widen to 2.4% of GDP in 2022 (vs. 3.7% before). The IMF’s nominal GDP projections imply an average UAH:USD rate of UAH 27.5 this year and a similar level next year.

The Ministry of Finance placed UAH 0.6bn of hryvnia-denominated debt.

According to NBU data, outstanding gross UAH loans increased by 2.1% m-o-m (+18% y-o-y) in September following 3.6% m-o-m growth in August, while gross F/X loans fell by 3.3% m-o-m (-17% y-o-y). Total UAH deposits rose by 3.4% m-o-m in September after falling 1.0% in August, with the y-o-y growth tally at 22.2%. F/X deposits inched up by 0.4% m-o-m after dropping by 1.8% m-o-m in August and were up 0.6% y-o-y.

DTEK Oil & Gas (DOG) increased 9M21 natural gas production by 11% y-o-y to 1.5 bcm.

The Cabinet of Ministers approved a UAH 22.8bn sovereign guarantee for state transmission system operator Ukrenergo’s planned Eurobond issuance intended to raise proceeds to repay debt owed to renewable power producers. The principal, interest and guarantee cost of 0.5% p.a. would be included into the Ukrenergo tariff.

The Prosecutor General’s Office issued an arrest warrant for pro-Russian opposition politician Viktor Medvedchuk (with the alternative to post UAH 1bn ($40m) bail). The new probe against Russian President Vladimir Putin’s close ally, who is already under house arrest awaiting trial on an earlier charge of high treason, accused him of financing terrorism and undermining domestic energy security at the height of Ukraine’s war with Russia in 2014 by organizing a scheme to supply coal from Ukraine’s eastern regions controlled by Russian-backed separatists. The State Security Service said it would study former president Petro Poroshenko’s possible involvement.

The Verkhovna Rada passed amendments to the 2021 budget law, increasing the revenue and spending targets by UAH 39bn (0.8% of GDP) to UAH 1,147bn and UAH 1,393bn, respectively, leaving the planned deficit unchanged at UAH 247bn.

Fitch Ratings affirmed Vodafone Ukraine’s (VFU) Long-Term Foreign Currency Issuer Default Rating (IDR) at B, with a positive outlook and on the same level with Ukraine’s country ceiling. According to the agency, VFU’s credit profile benefited from its solid market position (around 35% of subscriber base), ownership of the backbone infrastructure, high profitability, and a moderately competitive environment. This was counterbalanced by high F/X risks and the lack of product and geographical diversification.

Stock-specific demand and recovery in global markets helped Ukrainian shares extend their upward trend for another week.

The Verkhovna Rada confirmed Ruslan Stefanchuk as parliament’s new speaker, promoting him from the position of first deputy speaker after dismissing Dmytro Razumkov from the post a day earlier.

Headline inflation accelerated to 11.0% y-o-y in September from 10.2% in August, while core inflation, an indicator adjusted for administratively regulated tariffs and prices of raw foods and energy, stood at 7.4% y-o-y, up from 7.2% in August.

According to state rail monopoly Ukrainian Railways’ (RAILUA) CFO Ivan Yuryk, the company has been gradually improving its bottom line this year. Based on YTD monthly data he provided, RAILUA recovered from heavy losses in 1Q21 (UAH 693m in January, UAH 534m in February and UAH 448m in March) to marginal profitability in 2Q21 (profits of UAH 35m in April, UAH 39m in May and UAH 192m in June) and a much more evident rebound in recent months (net income of UAH 110m profit in July, UAH 507m in August and UAH 322m in September). Thus, the YTD net loss shrank to UAH 470m ($17m) in 9M21 from UAH 1,408m in 1H21, with the company planning to become profitable on a full-year basis. The main drivers included higher cargo transportation volumes (i.e. agricultural exports), the initial positive effect of cargo tariff hikes, sales of non-core assets, efforts to maintain the railcar market share, and debt portfolio optimization.

This week will be short in Ukraine due to public holidays on Oct. 14-15.

Naftogaz reportedly received UAH 27bn from the gas transit system operator OGTSU to continue gas imports

NBU gross international reserves in September declined by 9.2% (by $2.9bn m-o-m), to $28.7bn (-1.5% YTD or $0.4bn). The end-September reading was equivalent to an est. 4.6 months of 12-month trailing goods and services imports and fell marginally below the lower bound of the 2021E aggregate reserve adequacy (ARA) metric estimated at $29bn. The hryvnia gained 1.3% m-o-m in the interbank exchange market in September, reaching UAH 26.6:USD (+6.6% YTD), and appreciated by another 1.0% by Oct. 7, to UAH 26.3:USD, +7.7% YTD.