Analysts at Morgan Stanley suggest using the recent drop in the value of Ukraine’s Value Recovery Instruments (VRI, quotes as of Tuesday evening totaled 102.4%), especially if the price drops below 100%, to buy these instruments, since their fair value is significantly higher and is about 145%, according to the bank’s report issued on April 19.
Its authors said that the second quarter of this year will bring the first payment on these securities and may show double-digit economic growth rates.
According to the analysts at Morgan Stanley, depending on the results of economic growth in 2021 and 2022, there is a significant, up to 30 percentage points, growth potential for the price of VRI in Ukraine.
According to the report, Ukrainian eurobonds have also become more attractive in recent weeks, although geopolitical uncertainty does not yet allow taking a clear position on them and such a situation, as the history of recent years shows, may continue, and spreads may even double. According to the analysts, from the entire spectrum of Ukraine’s eurobonds, dollar-denominated securities with maturity in September 2024 and 2025 look preferable, as well as in euros with maturity in 2026 due to the increased spread compared to dollar-denominated bonds.
The analysts add that government domestic loan bonds now do not look as attractive as eurobonds, their real profitability is not high, and one should expect their cheaper valuation.
Last week, in its lending strategy for Ukraine, Morgan Stanley, explaining its cautious stance on the country’s eurobonds, also pointed to the slow progress of reforms and the delay in the IMF tranche, COVID-19, as well as overall risks in emerging markets. At the same time, the analysts noted better-than-expected results for 2020 and a favorable macroeconomic background for 2021 with a slight current account deficit. In their opinion, Ukraine will receive one tranche from the IMF this year – at the beginning of the second half of the year, but there is a risk of a worsening of the situation, which could lead to the fact that both sides will eventually turn to a new program late 2021 or early 2022.
VRI were issued as part of the restructuring of the state debt of Ukraine in 2015 instead of eurobonds for a nominal amount of $3.2 billion (20% of the restructuring volume) and are not part of the country’s public debt. Payments under VRI will be made annually in monetary form in U.S. dollars, depending on the dynamics of real GDP growth in Ukraine in 2019-2038, but in two calendar years – that is, between 2021 and 2040.
If GDP growth for the year is below 3% or real GDP is less than $125.4 billion, then there will be no payments on securities. If the growth of real GDP is from 3% to 4%, the payment on securities will be 15% of the excess of the GDP indicator over 3%, and if it is above 4%, then another 40% of the excess of the GDP indicator over 4%. In addition, from 2021 to 2025, payments are capped at 1% of GDP. The absence of any restrictions on payments after 2025 in the case of rapid GDP growth has been criticized by individual politicians and experts within the country.
Ukraine in the middle of August 2020 announced the completion of the buyout of about 11% of its VRI on the open market to reduce payments on them in the future. Roughly payments on VRI in 2021 before their partial redemption are estimated at $40 million, funds for them have already been provided in the state budget.
Official rates of banking metals from national bank as of April 21
One troy ounce=31.10 grams
National bank of Ukraine’s official rates as of 21/04/21
Source: National Bank of Ukraine
The fifth president of Ukraine, the leader of the European Solidarity party, Petro Poroshenko, has declared receipt of UAH 152.4 million in dividends from Sequent Schweiz AG (formerly Rothschild Trust Schweiz AG), the corresponding information is published in the unified state register of declarations.
According to it, Poroshenko received dividends in the amount of UAH 152.4 million from the Swiss company on March 31 this year.
In addition, the ex-president declared income of UAH 610,900 in the form of interest from deposits in the International Investment Bank belonging to him, which he declares in a similar amount every month.
As reported, in 2016, Poroshenko appointed Rothschild Trust as a trustee in the blind trust to manage his stake in Roshen Confectionery Corporation.
For 2020, the leader of European Solidarity declared UAH 222 million of income, of which UAH 214 million are dividends, UAH 7 million are interest on deposits in the bank, and UAH 500,000 is a salary in the Verkhovna Rada.
Poroshenko kept $ 3.09 million, EUR 40,000 and UAH 330,000 on accounts in the International Investment Bank, as well as $ 51.2 million and UAH 423.3 million in cash.
Number of unemployed in ukraine and job opportunities, Feb 20 – Feb 21.
Retail goods turnover in Ukraine in March 2021 year-over-year grew by 13.1% year-over-year in comparable prices, the State Statistics Service has reported.
In the first quarter of 2021, retail trade turnover grew by 7.5% compared to the first quarter of 2020, while in March 2021 compared to the previous month, its growth was 11.8%.
The largest increase in the retail turnover of enterprises (legal entities and private entrepreneurs) in January-March 2021 year-over-year was recorded in Kyiv (by 14.6%), Chernivtsi (by 13.7%), Vinnytsia (by 12.5%), Ternopil (by 11.8%), Chernihiv (by 10.5%), Khmelnytsky (by 10%), Poltava and Zakarpattia (by 9, 9%), Zaporizhia (9.8%), Dnipropetrovsk (9.1%), Odesa (8.9%), Lviv (7.8%) regions and Kyiv city (6.8%).
The authority said that the data are given without taking into account the temporarily occupied territory of the Autonomous Republic of Crimea, the city of Sevastopol and the Joint Forces Operations area.
