Ukrainian Bond Weekly
Following a staff-level agreement with the IMF announced late on Friday, Ukraine swiftly scheduled a road show for a 10-year Eurobond this week, which might be appended by a “long” 5-year tranche. Markets will definitely focus on the planned new issuance this week. We estimate the government needs to raise $1.3bn-2.0bn and do not rule out that the priority will switch to a cheaper 5-year issue. Domestically, the NBU is to announce its rate decision on Oct. 25. Although the latest substantial progress on the IMF program mitigated external risks, we think the NBU may still hike its key rate by up to 50bp, to 18.5% p.a. (vs. flat rate at 18.0% seen by Bloomberg consensus), given that inflation expectations remain elevated and September’s inflation (headline at +8.9% y-o-y, core at +8.7%) came in above NBU estimates (+8.3% and +8.1%, respectively). Among macro data releases, we estimate September IP (Oct. 23) improved only marginally, to close to 0% from -0.5% in August. In addition, September budget and public debt data may come out early next week. Finally, Fitch is scheduled to issue its next update on Ukraine on Oct. 26 — we expect the rating to remain unchanged at B- with a stable outlook.