The EBRD Board on Dec. 4 approved EUR 1.3bn in loans, guarantees and grants for eight Ukrainian projects, including two sovereign-guaranteed loan facilities for Ukrainian Railways (RAILUA) for a total of EUR 480m. The funding for RAILUA includes EUR 300m to buy electric locomotives and EUR 180m to acquire and install up to 270 MW of small-scale gas-fired power generation.

NBU gross foreign reserves jumped by 9.1% (+$3.3bn) m-o-m in November, to $39.9bn (still -1.4% YTD), equivalent to 5.0 months of prospective goods and services imports. The official exchange rate of the hryvnia to the US dollar dropped by 0.8% m-o-m to UAH 41.6:USD in November after staying virtually flat for three months, thus increasing the YTD rate of depreciation to -8.7%.

Ukraine’s gas transit contract with Russia will not be extended after it expires at the end of 2024, Deputy Energy Minister Roman Andarak and head of the strate company Gas Transit System Operator of Ukraine (GTSOU) Dmytro Lippa said at a conference yesterday. The head of GTSOU also said that halting Russian gas transit increases the risks of Russian attacks on the Ukrainian gas system and the company is preparing for such a scenario. GTSOU operates 511 gas compressor stations, 10 of which are used for transit.

According to provisional data from the Finance Ministry, the central budget’s cash-based deficit narrowed to UAH 125bn ($3.0bn) in November from UAH 198bn ($4.8bn) in October.

Astarta Holding, Ukraine’s largest sugar producer, may attract up to $80m from IFC, including a $40m direct loan and $40m of additional mobilized financing, to fund the construction of a soybean protein concentrate plant in the Poltava region. Other lending parameters were not disclosed. A meeting of the IFC Board to consider the loan is scheduled for Feb. 28, 2025.

Parliament has appointed Naftogaz CEO Oleksiy Chernyshov to the position of deputy prime minister and minister for national unity, leading to his resignation from the company.

The Ministry of Finance placed UAH 22.0bn ($528m) of hryvnia-denominated bonds at a primary auction yesterday.

The rating agency S&P has upgraded its long-term issuer credit rating on Kernel Holding by two notches, from CC to CCC, with a negative outlook, citing the company’s timely repayment of $300m notes in October and stronger than expected cash generation. Although S&P expects Kernel’s cash generation to remain largely stable in 2025FY (free operating cash flow seen at $300-350m vs. $326m in 2024FY), it highlighted a high risk of disruptions to Ukraine’s Black Sea ports operations that may worsen Kernel’s earnings outlook and ability to repay debt obligations in view of no access to public capital markets.

The US Department of Defense announced $725m in immediate military assistance from Ukraine, including artillery and air defense munitions and, for the first time, “non-persistent anti-personnel landmines” and being sent from Pentagon stocks under the Presidential Drawdown Authority (PDA) program. Commenting on the new package, National Security Advisor Jake Sullivan mentioned President Joe Biden’s September order to fully utilize the remaining military aid for Ukraine by the end of his term in January. By that time, the US will additionally deliver “hundreds of thousands of additional artillery rounds, thousands of additional rockets, and other critical capabilities,” according to Sullivan. He also said Ukraine has already received “hundreds” of air defense missiles and more was being sent. On a related note, visiting German Chancellor Olaf Scholz announced $650m in new security assistance to be delivered this month, including IRIS-T air defense systems, Leopard 1 tanks and strike UAVs.

The National Bank’s survey-based index of business activity, a PMI-type gauge, stood at 47.2 in November on a 0-100 scale, down 2.3pt m-o-m and 2.0pt y-o-y.

Metinvest has issued an update on its Ukrainian operations, reporting heavy fighting and Russian advances in the Pokrovske Coal area and announcing a suspension of production at Inhulets Iron Ore due to power shortages. On Pokrovske Coal, Metinvest specified that one of the mine’s shafts is now less than 10 km away from the front line, has experienced sporadic shelling and been recently damaged. The company noted that in 1H24 Pokrovske Coal accounted for 58% of group’s coal production and contributed over a third of EBITDA. Commenting on its iron ore assets, Metinvest said recent Russian attacks on the Ukrainian energy system forced the company to restart power imports, with the stoppage of Inhulets Iron Ore partly offset by higher utilization at Northern Iron Ore. (Company)

Key highlights from last week: Russian forces have made further gains in the Pokrovsk-Kurakhove sector in Donetsk region, other front lines stable President Volodymyr Zelensky, for the first time, signals readiness to accept territorial losses in exchange for ceasefire and NATO security guarantees, announces surprise promotions for battle-tested military commanders.

Ukraine’s headline current account (C/A) deficit shrank to $1.9bn in October from $2.4bn in September, while the financial and capital account (F/A) balance, including IMF funds, ran a $0.4bn deficit, narrowing from -$1.1bn in September. Thus, the total balance came in at -$2.3bn, improving from -$3.5bn in September and bringing the 10M24 deficit to $4.6bn, down from a $10bn surplus in 10M23.

Ukraine’s base load day-ahead (DAHD) electricity price averaged UAH 5,276/MWh or EUR 120/MWh in November, flat m-o-m and up 31% y-o-y. The average bilateral base load price on the Ukrainian Energy Exchange (UEEX) for November supplies dropped by 1.3% m-o-m to UAH 5,077/MWh (+32% y-o-y), or 4.3% below the day-ahead level. December base load electricity supplies are currently priced slightly higher at UAH 5,099/MWh (+0.4% m-o-m, +32% y-o-y).

Ukraine and the EU have signed a memorandum of understanding on EUR 18.1bn of new exceptional macro-financial assistance (MFA), being part of the G7’s $50bn extraordinary revenue acceleration (ERA) package backed by proceeds from immobilized Russian sovereign assets.

Ukraine’s direct and guaranteed public stood at $155bn as of end-October, flat m-o-m and up 6.9% YTD.