09:56 05.04.2017

IMF predicts Ukraine's re-access to eurobonds market late in 2017

The International Monetary Fund (IMF) predicts Ukraine's re-access to the foreign eurobonds market as early as in 2017, the IMF said in its staff report for the 2016 Article IV consultation and third review under Ukraine's Extended Fund Facility.

"Evidence points to an early return to market access in past successful preemptive debt operations, with time to re-access at about three years from the start of the operation. Ukraine's time to re-access markets after its 1998 debt restructuring was also about three years. It is then expected that in 2017 Ukraine would be able to re-access international capital markets (five-year bonds at a yield of 9%), supported by the improved debt profile as a result of the debt operation (reflected in the notable reduction in sovereign risk to pre-crisis levels) and assuming a continued de-escalation of the conflict in the east," the report reads.

The IMF projects that in 2018-2020, Ukraine will borrow $2 billion on the eurobond market every year, and the borrowings will grow to $3 billion in 2021.

IMF experts say that low gross financing needs during the post-program period, well below the high-risk benchmark in the debt sustainability framework, would help ensure the needed continuous market access.

At the same time, according to the IMF materials, the United States will stop providing guarantees to Ukrainian-issued eurobonds from this year, whereas in previous years Ukraine was able to raise $3 billion at record low rates due to the guarantees.

IMF estimates show that after a drop in foreign financing to $2.8 billion in 2016 from $8.3 billion in 2015, this indicator will go up to $7.2 billion in 2017. In 2018, it is expected to be $3.3 billion, after which Ukraine is supposed to begin repaying the debts.

The IMF's net financing in 2017 is expected to be $4.6 billion, that by the EU will be $1.3 billion, while the World Bank will lend $0.2 billion, the EBRD/EIB and other similar lenders are expected to disburse $1.1 billion.

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