WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, said its oilseed processing plant in western Ukraine had suffered damage in a recent Russian drone attack, leading to a temporary production halt. The company is assessing the extent of damage and associated losses.

Ukraine exported 4.2 Mt of grain and oilseeds in July, the first month of the marketing year (MY) 2024/25 (July 2024-June 2025), up 2.2% m-o-m and 62% y‑o‑y. Grain exports totaled 3.7 Mt, down 5.2% m-o-m but up 63% y-o-y, and oilseed exports stood at 514 kt (up 2.4x m-o-m and +57% y-o-y).

According to multiple Russian sources, the Ukrainian military expanded its area of control in Russia’s Kursk region yesterday after launching its cross-border incursion on Tuesday (see red circle on map below). Kursk borders Ukraine’s northern Sumy region, and this area has seen no active ground fighting since Russian forces were driven out of Sumy and the rest of northern Ukraine in the early phase of the Russian invasion in the spring of 2022. The only exception was a short-lived cross-border raid by pro-Ukrainian units composed of Russian nationals earlier this year.

The Ministry of Finance placed UAH 12.3bn ($298m) of hryvnia-denominated bonds at a primary auction yesterday.

NBU gross foreign reserves dropped by 1.7% ($0.7bn) m-o-m and 8.1% YTD in July, to $37.2bn, equivalent to 4.8 months of prospective goods and services imports according to central bank estimates. The official exchange rate of the hryvnia to the US dollar fell by 1.2% m-o-m to UAH 41.0:USD in July after staying unchanged in June, thus widening its YTD decline to -7.4%.

Ukrenergo CEO Volodymyr Kudrytsky said the company plans to settle all its arrears related to the balancing power market, which totaled UAH 16.5bn or $0.4bn in early July, by the end of 2024. For this the company will use its dispatching revenues, income from selling access to cross-border power import capacities, and IFI financing. Kudrytsky also announced a parliamentary bill intended to stop the accumulation of new balancing market arrears. The underlying measures include permission for system operators to cut off non-paying customers from power and introduction of special-purpose accounts for critical infrastructure companies (water and heating utilities, etc.) for automatically charging power costs. Additionally, the government considers singling out the most important infrastructure companies for supplying power to them outside of the commercial market, either via a public service obligation regime or direct sales from state-owned power generators, e.g. the nuclear power plant operator Energoatom.

Ukraine has received a $3.9bn budget support grant from the US, representing half of a $7.8bn package approved for this year. The money was channeled via the World Bank and will be used to reimburse non-military budget expenditures such as salaries to teachers, emergency servicemen and other public sector employees, as well as payments to vulnerable population groups.

According to provisional data from the Finance Ministry, the central budget ran a cash deficit of UAH 145bn or $3.6bn in July, slightly lower than UAH 151bn ($3.7bn) in June.

Minutes from the latest meeting of the NBU Monetary Policy Committee (MPC), which preceded the NBU Board’s key rate meeting on Jul. 25, showed unanimous support for leaving the rate unchanged at 13.0% p.a., in line with the central bank’s earlier forward guidance. MPC members justified this view by aggravating inflationary pressures caused by rising power costs for businesses, the pass-through effect of hryvnia weakness, domestic consumption’s resilience to power shortages, and the government’s intention to hike taxes.

Ferrexpo reported that a resolution by the Ukrainian Justice Ministry’s State Enforcement Service placed restrictions on 49.3% of shares in Ferrexpo Poltava Mining held by Ferrexpo’s Swiss subsidiary Ferrexpo AG. The restrictions prohibit any transfer of the stake and were imposed as part of an enforcement process to satisfy a debt claim to Ferrexpo majority shareholder Kostyantyn Zhevago from the National Bank of Ukraine. Ferrexpo said that if the enforcement process is not interrupted it could lead to the sale of the restricted shares. It also stressed that Ferrexpo’s operations have not been affected.

Fitch Ratings cut its long-term issuer rating on state-owned Ukrainian Railways (RAILUA) to C from CC following its downgrade of Ukraine’s long-term foreign currency issuer rating on Jul. 24. Fitch will review the RAILUA rating once its reassesses the sovereign ratings after Ukraine completes debt restructuring. According to Fitch, RAILUA remains current on all its debt obligations and has sufficient liquidity to service its debt falling due by end-2024, including payments under the EIB and EBRD facilities. At the same time, the agency noted that the sovereign’s weaker financial position and impaired capacity to provide extraordinary support to RAILUA may weigh on the company’s willingness and ability to service and repay its obligations, especially the 2026 and 2028 Eurobonds for a combined total of $895m, which accounted for 73% of its total debt as of end-July.

The rating agency S&P downgraded Ukraine’s long-term foreign currency issuer rating to SD from CC on a missed coupon payment on the 2026 Eurobond, which fell due on Aug. 1. The agency said it tends to rate most sovereigns emerging from default in the CCC or B categories depending on post-default credit factors, including new terms of government debt.

The majority shareholders of WSE-listed Ovostar Union, one of the largest shell egg producers in Ukraine, have submitted an application to the Cyprus Securities and Exchange Commission for the approval of a squeeze-out procedure to acquire 100% of Ovostar shares.

Russian forces keep advancing in Donetsk regions, but their gains remain largely limited to Pokrovsk sector

The National Bank’s index of business activity expectations, a PMI-type gauge, rose by 0.9 points m-o-m in July, to 44.4 on a 0-100 scale (-4.3 y-o-y), following drops of 4pt for two consecutive months.

The average base load day-ahead (DAHD) electricity price rose by 12% m-o-m in July, to UAH 5,567/MWh (EUR 125/MWh), up 61% y-o-y. The average bilateral base load price on the Ukrainian Energy Exchange (UEEX) for July supplies dropped by 2.4% m-o-m to UAH 5,353/MWh (+75% y-o-y), or 4% lower compared to the day-ahead market. August baseload supplies are currently priced at UAH 5,050/MWh (-5.7% m-o-m and +43% y-o-y).