Fixed Income

May 04, 2017

Ukrainian sovereign Eurobonds were mostly higher last week, with the yield on the shortest issue reaching a post-EuroMaidan historical minimum of 6.7% after the successful placement of a new issue of corporate bonds triggered buying in other Ukrainian fixed income instruments. Poultry giant MHP sold USD 500mn of bonds with maturity in 2024 at just 7.75%, which is a full percentage point below the sovereign yield curve. The coupon on these new MHP-24s is also notably lower than the 8.75% paid by agro group Kernel when it placed its 2022 bonds 3 months ago. MHP said it will use the proceeds to finance a buyback of up to USD 350mn of its outstanding USD 750mn bonds with coupon of 8.25% due in 2020, thereby effectively extending the debt for another four years. The company will also refinance short-term debt and invest in expansion of its poultry and grain businesses. The outstanding MHP-20s issue rose by 1.4% to 103.8/104.7 (6.8%/6.4%). The country’s longest outstanding Eurobond issue,