Ukraine’s headline current account (C/A) balance turned to a $3.2bn surplus in August from a $2.2-2.3bn deficit in June-July, while the financial and capital account (F/A) surplus, including IMF funds, was virtually flat m-o-m at $1.6bn.

The State Statistic Service (SSS) reported that industrial production (IP) growth slowed to 8.1% y-o-y in 1H24, down from 11% in 1Q24, while construction growth decelerated to 37% y-o-y, compared to 40% in 1Q24. Cargo transportation rose by 19% y-o-y in 1H24, nearly in line with the 20% recorded in 1Q24, while passenger transportation expanded by 17% y-o-y, following a 24% increase in 1Q24.

DTEK Renewables posted 1H24 financial results, reporting revenues of $69m (net of financial component), up 25% y-o-y, EBITDA of $57m, up 23% y-o-y, for an EBITDA margin of 83% (+1.3pp y-o-y), and net income of $36m, a significant increase from net income of $5m in 1H23. Net operating cash flow increased by 45% y-o-y to $55m, net investment outflow stood at $52m (vs. an inflow of $39m in 1H23), and net financing cash outflow decreased by 68% y-o-y to $15m.

The National Bank’s survey-based index of business activity, a PMI-type gauge, stood at 48.7 points in September on a 0-100 scale, virtually flat m-o-m but down 1.4 points y-o-y.

The Ministry of Finance placed UAH 11.8bn ($286m) of hryvnia-denominated bonds at a primary auction yesterday, slightly up from UAH 11.1bn the previous week and in line with September’s weekly average. The Finance Ministry did not offer any F/X-denominated bonds, after placing $150m the previous week and $161m net in September.

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, has confirmed its plans to fully repay $300m 2024 Notes on Oct. 17.

The acting CEO of Ukrenergo, Alexey Brekht, stated that Ukraine could pass the upcoming winter with little-to-no electricity consumption caps if temperatures stay around 0°C. He estimated a capacity shortage of approximately 2-2.5GW if temperatures drop to -10 to -15°C, which implies that about a third of residential and small commercial consumers may be cut off from electricity for eight hours a day during peak consumption times. These calculations assume that thermal power producers will repair around 1GW of capacity before winter, another 500MW of distributed generation will be built by year-end, a 250MW ship-based power plant will be connected to the energy system in the Odesa region, and electricity import capacities will expand from the current 1.7GW to 2.0GW, with an ability to utilize 200MW of emergency imports for Ukrenergo.

Metinvest CEO Yuri Ryzhenkov at the Siderweb 2024 forum in Italy said that he expects positive changes on the global steel market in 2025 noting that after peaking in 2021 the steel market started to stagnate in 2022 as world was adjusting to the war in Ukraine, higher energy prices, logistic links disruptions, etc. Ryzhenkov noted that current downcycle is the longest during last 20 years and hopes that US rate cuts and Chinese stimulus package will help to reverse the downward trend.

Minutes from the latest meeting of the NBU Monetary Policy Committee (MPC), held prior to the NBU Board’s key rate decision on Sep. 19, revealed that 10 out of 11 members supported leaving the rate unchanged at 13.0% p.a., consistent with the central bank’s forward guidance, while one member advocated for a 50bp hike to 13.5%. All MPC members agreed that the current balance of risks does not permit resuming the key rate cutting cycle, as inflationary pressures continue to worsen. These pressures are fueled by a lower agricultural harvest, rising business costs due to a spike in electricity prices and acute labor shortages, and the pass-through effect of hryvnia weakness.

Vodafone Ukraine (VFU), Ukraine’s second largest mobile operator, said in a cleansing statement that on Sep. 19-30 the company has engaged in restructuring talks with several major holders of its $400m 2025 Notes. As the company remains banned from using its local liquidity to repay Eurobond principal, VFU proposed extending the notes’ maturity by 3 years, adding mandatory prepayment provision requiring repayment of the Notes in case of capital controls relaxation, increasing coupon rate to 7.7% (from 6.2% currently), pledging VFU’s cash balances held in Ukraine, and paying consent fee of 1.5%.

Ukrainian corporate bonds returned to a rally in 3Q24 after slowing in the previous quarter in the wake of Russian attacks on Ukraine’s energy infrastructure. The Ukraine CEMBI Broad Index returned +5.1% in 3Q24 following +1.6% in 2Q24, bringing its 9M24 performance to +19.9%. INTHOL 26 was the top performer in 3Q24, adding 7.5pt to 78.5 (mid) and catching up with its medium-risk peers.

Ukraine’s direct and guaranteed public totaled $155bn as of end-August, flat m-o-m and up 6.4% YTD.

Key highlights from last week: Russian forces make further marginal gains in Donetsk region, still failing to convert their tactical advances into a wider breakthrough The front line in the Kursk region in Russia stabilizes, but probably only briefly Looking to the Oct. 12 leader-level Ramstein meeting to finally produce clarity on Western allies’ near-term support for Ukraine needed to stop Russia’s small but steady territorial progress

DTEK Energy reported 1H24 sales of $650m (-37% h-o-h and -19% y-o-y), EBITDA of $190m (-52% h-o-h and -37% y-o-y) and net loss of $39m, down from net income of $170m in 1H23 and $203m in 2H23. The EBITDA margin came in at 29%, down 9.0pp h-o-h and 8.2pp y-o-y. Net operating cash flow shrank by 80% h-o-h and 56% y-o-y to $117m, including on account of a $39m increase in working capital (vs. a $267m release in 2H23 and almost zero change in 1H23). Net investing cash outflow was down 73% h-o-h and 11% y-o-y to $90m. Net cash outflow from financing activities was down 84% h-o-h and 66% y-o-y to $48m.

Metinvest faces a $0.9bn debt service bill over 2H24-April 2026, with two of its four Eurobonds (EUR 183m and $438m) falling due over the period along with other debt and interest. Metinvest has reported strong 1H24 EBITDA of $650m, the highest since 1H22, yet external market conditions have deteriorated thus far in 2H24 and costs have increased as electricity prices in Ukraine surged.

US President Joe Biden announced before his meeting with Ukrainian President Volodymyr Zelensky in the White House yesterday that he directed the Department of Defense to allocate all remaining security assistance for Ukraine by the end of his term in office in January. In a separate statement, the Department of State said it had notified Congress of the intent to draw down $5.55bn worth of defense articles and services from Pentagon stocks for delivery to Ukraine in the coming months, thereby utilizing the remaining amount under the Presidential Drawdown Authority (PDA) expiring on Sep. 30. Additionally, the Department of Defense announced another $2.4bn in military aid for Ukraine under the Ukraine Security Assistance Initiative program, which finances procurements of new weapons from US manufacturers, this package including air defense and air-to-ground munitions and “equipment and materiel to support Ukrainian munitions production,” among other things.