Situation favorable for Eurobonds, GDP warrants redemption but no such actions are advisable - Ukrainian finance minister
KYIV. May 6 (Interfax-Ukraine) - It is inadvisable to redeem Ukrainian Eurobonds and GDP warrants at this moment despite a favorable situation in the market of these instruments, Ukrainian Finance Minister Serhiy Marchenko said on Friday.
"First of all, there are no funds to do so, and, secondly, our partners will wonder how we spend their money. Still, there is a truly favorable situation for the redemption of warrants and Eurobonds. We are working on it. I cannot say that the Finance Ministry continues to rule out the option. Still, it does not look advisable at this point," Marchenko said.
Ukraine plans to continue to service its debt, he said.
As for the sporadic calls for sovereign debt restructuring, Marchenko said it was a rather sensitive issue.
"I do not like that people who bear no relation to such matters and are not experts in this area express their opinions. This is a domestic affair. This is a matter of reputation and trust. We may seize the opportunity, but it will do us harm in the future. Even the talk of potential restructuring is very harmful for us and our plans," he said.
Marchenko said he did not expect any problems with servicing the sovereign debt in the near future, including the payments of slightly over $200 million in May, as well as in June, July, and August.
"Yes, there is a question of September, when we are due to pay $900 million on Eurobonds. We are working on it, but I would not say that we are preparing any decision or are ready to propose anything," Marchenko said.
The Ukrainian Finance Ministry said in early February 2022 it had recently redeemed about 10% of Eurobonds maturing in September 2022 and thus reduced the amount of Eurobonds in circulation to $912 million.
In addition, the Finance Ministry carried out several buyback transactions with GDP warrants, bringing their volume in state ownership to about 20% of the total nominal amount of securities.
The value of GDP warrants fell to 66.7% of the nominal in January, as against 90.7%-95.3% in December and over 100% in practically every other given month of last year. However, a certain stabilization and, possibly, the activity of the Finance Ministry restored their value to 76.7% and the value of 2022 Eurobonds to 97.1%.
The value of Eurobonds and GDP warrants dropped again after February 24: the current value of Eurobonds maturing in September 2022 is about 58.3% of the nominal, while the value stands at 42% of the nominal for Eurobonds maturing in September 2023, 35.9% for Eurobonds maturing in September 2024, and 26.5% for Eurobonds maturing in September 2032.
The value of GDP warrants nears 31.1%; it has recently gone up, which could be linked to market actors' expectations of a substantial economic growth in Ukraine following a plummet in 2022, which means higher payments on these instruments.
