Ukraine and the EU have signed a credit agreement and respective memorandum on the provision of EUR 6bn in bridge financing under the EU’s recently approved EUR 50bn Ukraine Facility. According to the agreement, the first tranche of EUR 4.5bn will be disbursed shortly after the memorandum comes into force, with the remaining EUR 1.5bn to be provided upon Ukraine’s implementation of underlying conditions in the spheres of public finance, fight against corruption, and business climate development. According to the Ukrainian Economy Ministry, Ukraine has already completed three of the five conditions attached to the second tranche. The bridge financing will be provided in the form of loans with a maturity of 35 years and a grace period of 10 years. 

The US administration announced yesterday $300m in new military assistance for Ukraine, this package including a “large tranche” of artillery rounds and ammunition for HIMARS multiple launch rocket systems, Stinger anti-aircraft missiles, and various other items. Concurrently, the White House called on the House of Representatives to pass “as soon as possible” the Senate-approved $95bn foreign aid bill that includes $60bn in new Ukraine-related military and economic assistance, adding that the newly announced aid shipment could be expended by the Ukrainian military in a “couple of weeks.”

Ferrexpo reported that its subsidiary Ferrexpo Poltava Mining’s (FPM) supplier and related party, LLC Kysen, has applied to open creditor protection proceedings in relation to UAH 2.2m ($58,000) of debt owed by the Ferrexpo subsidiary. Ferrexpo said it took steps to settle the debt but could not guarantee that the funds would be transferred in a timely matter due to restrictions imposed on FPM accounts. FPM also received a notification about a court order to freeze its bank accounts in relation to an investigation into alleged illegal extraction of gravel.

DTEK Energy increased power production by 6% y-o-y to 2.6 TWh in 2M24.

Crude steel production in Ukraine totaled 1.1 Mt in 2M24, up 52% y-o-y, with finished and semi-finished steel output rising by 52% y-o-y to 0.9 Mt and hot metal production up 42% to 1.1 Mt.

The rating agency S&P on Mar. 8 cut its long-term foreign currency issuer rating on Ukraine by two notches, to CC from the previous level of CCC assigned on Apr. 6, 2023, leaving the rating outlook negative. The downgrade reflected Ukraine’s approaching commercial debt restructuring, which S&P expects to be concluded by mid-year and which it would consider a distressed debt exchange. The agency said it could upgrade Ukraine’s rating if the likelihood of a distressed exchange of commercial debt decreased. S&P assumes the war with Russia will last at least until end-2024 and likely beyond. The agency expects Ukraine’s foreign donors to provide $38bn in budget support this year, viewing the potential absence of US support as manageable, with the resulting gap to be bridged using help from other donors and domestic borrowings. However, S&P stressed a higher level of uncertainty related to external support beyond 2024.

Headline CPI increased by 0.3% m-o-m in February following 0.4% growth in January, slowing on a y-o-y basis to 4.3% from 4.7% in January. Core inflation increased by 0.4% m-o-m, in line with January, decelerating to 4.5% y-o-y from 4.6% in January.

Russian forces maintain high tempo of assaults but their advances slow, especially outside of Donetsk region

According to the State Statistics Service, monthly salaries paid to staff workers averaged UAH 17,445 ($477) in nominal terms in 2023, up 17.4% y-o-y on top of 6.1% growth in 2022.

State rail monopoly Ukrainian Railways (RAILUA) reported freight transportation of 14.5 Mt in February, up 2.9% m-o-m and 30% y-o-y and a new wartime high.

NBU gross foreign reserves fell by 3.8% or $1.5bn m-o-m in February, to $37.0bn, still up 28% y-o-y. The end-February tally was equivalent to 4.9 months of prospective goods and services imports, according to a central bank estimate. In the meantime, the official exchange rate of the hryvnia to the US dollar weakened by 0.9% m-o-m to UAH 38.21:USD (-0.6% YTD) and lost another 0.5% in first four working days of March, to UAH 38.39:USD.

Ukraine exported 6.5 Mt of grain and oilseeds in February, the eighth month of the marketing year (MY) 2023/24 (July 2023 – June 2024), up 7% m-o-m and 12% y‑o‑y. Grain exports totaled 5.9 Mt, up 11% m-o-m and 13% y-o-y, while oilseed exports stood at 593 kt (-22% m-o-m, +6% y-o-y). February sunflower oil exports were reported at 601 kt (-2% m-o-m, +48% y-o-y).

The National Bank’s index of business activity expectations, a PMI-type gauge, rose by 6.6 points m-o-m and 2.5pt y-o-y in February, to 47.5 on a 0-100 scale.

According to provisional data from the Finance Ministry, the central budget ran a cash deficit of UAH 79bn ($2.1bn) in February, this figure accounting for grants as a revenue item. The budget gap increased from UAH 15bn in January but shrank from UAH 90bn in February 2023.

The Ministry of Finance placed UAH 4.9bn ($127m) of hryvnia-denominated bonds and $62m of USD paper at a primary auction yesterday.

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, published its 2Q24FY (October-December 2023) financial results, reporting sales of $1,044m (+91% q-o-q but -16% y-o-y), EBITDA of $205m (up 11.0x q-o-q, -26% y-o-y) and net income of $133m (vs. $31m loss in 1Q24FY and $207m net income in 2Q23FY).